Cia. Hering and Soma approve business combination, lower ore value in nine months, recommendations and more news

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Facade of the Farm store in Vila Velha (Photo: Publicity)

SAO PAULO – The corporate news this Wednesday (15) highlights the new step in the business combination between Grupo Soma (SOMA3) and Cia Hering (HGTX3), since it was approved at meetings of the two companies at the last tuesday.

Gol (GOLL4) announced the expansion of its commercial cooperation with American Airlines Group through an exclusive codeshare agreement for the next three years, which will deepen the relationship between the two airlines. As part of the Agreement, Gol will receive an equity investment of US$200 million (R$1.05 billion) from American.

In the commodities market, the day is again one of decline for ore amid weak data from China and production data, which could impact Vale (VALE3).

China’s iron ore futures contracts hit their lowest level in nine months on Wednesday, as steel output at the largest producer added to concerns over demand for the raw material. China’s monthly crude steel output fell for the third month in a row to 83.24m tonnes in August, data from the national statistics office showed, making average daily output the lowest since March 2020.

The most traded iron ore futures contracts on the Dalian Commodity Exchange for January delivery dropped by 4.3% to RMB 683 ($106.02) per tonne, the lowest since December 9, 2020. The contract closed down 2.9% to 693 yuan. Check out more highlights:

Grupo Soma (SOMA3) and Cia Hering (HGTX3)

Grupo Soma informed CVM in a material fact that the business combination with Cia Hering, announced in April, was approved at the meetings of the two companies last Tuesday.

Subsequently, its board of directors met and decided to confirm compliance with the suspensive conditions provided for in the Association Agreement and in the Protocol and Justification of the Transaction.

It also confirmed the amount of the portion in cash to be paid to Hering’s shareholders, after the adjustments provided for in the agreement, in the amount of R$9.5415843 per common share.

This amount is therefore equivalent to R$7.9153303 per redeemable preferred share issued by Cidade Maravilhosa Indústria e Comércio deClothes to be received by Hering shareholders.

Goal (GOLL4) and American Airlines

Gol announced the expansion of its commercial cooperation with American Airlines Group through an exclusive codeshare agreement for the next three years, which will deepen the relationship between the two airlines. As part of the Agreement, Gol will receive an equity investment of US$200 million (R$1.05 billion) from American.

This exclusivity allows the Agreement to exceed the terms of the existing codeshare partnership between Gol and American, increasing travel opportunities for its passengers, as well as improving the customer experience and Gol’s competitive position on routes connecting the Americas from the South and the North.

“In effect since February 2020, the existing codeshare represents the largest air network in the Americas and allows the Company’s Clients to conveniently connect to more than 30 destinations in the United States. The partnership’s flights currently operate at Gol’s hubs in São Paulo (GRU) and Rio de Janeiro (GIG), integrating 34 options of Brazilian and international routes, as is the case with Montevideo, Uruguay”, informed the company.

The conclusion of the agreement and the investment in equity are subject to certain conditions, including the signing and delivery of definitive documentation and other conditions usual for transactions of this size.

Bradespar (BRAP4)

Bradespar’s Board of Directors approved the company’s capital increase of R$1.66 billion. The company claims that the capital increase, with stock bonus, aims to increase the liquidity of the shares and make the stock attractive to more investors.

Vibra, formerly BR Distribuidora, provided clarification on the CVM’s questioning regarding the estimates disclosed in a notice to the market dated September 1, 2021, within the scope of Investor Day.

The expectations presented are based on a study by an independent consultancy, reflecting one of the possible scenarios in view of macroeconomic changes and discussions involving themes related to the energy transition, informed the company.

The company reinforces that it does not disclose projections or guidance in any way. Thus, any numerical references in said material have no such purpose.

With this, the company will include in its Reference Form the data mentioned and will exclude them as projections.

Plan & Plan (PLPL3)

Plano & Plano announced that it will carry out a share buyback program with the objective of acquiring up to 6 million common shares, or 9.33% of the company’s shares in free circulation. The deadline ends on March 13, 2023.

Refrigerators

Saudi Arabia suspended beef imports from five meatpackers in Brazil, which registered two atypical cases of “mad cows” earlier this month, informed the Ministry of Agriculture on Tuesday.

According to the folder, the five plants are in Minas Gerais, State in which one of the mad cow cases was identified. The second occurrence of the disease was registered in Mato Grosso.

Bradesco BBI began coverage of Viveo’s shares with an outperform recommendation (performance above the market average) and a target price of R$34.80, which corresponds to a potential appreciation of 43% compared to the previous day’s closing. .

Viveo is a distributor of medical products. The company was founded in 1996 by the Mafra family, which today controls the business together with the Bueno family, founders of the Amil group.

Among the investment points are the potential for significant growth, given an addressable market of R$94 billion (10 times the company’s size), Viveo’s unique ecosystem and good potential with mergers and acquisitions.

Overcome (UGPA3)

Bradesco BBI assesses that the market has lost references on what can be a sustainable margin for Ipiranga, an arm of Ultrapar. The bank says that, after the company disclosed a margin of R$53 per cubic meter in the second quarter in 2021, compared to the previous level, at R$90, investors do not know what to expect for the coming quarters.

Based on a call with the owner of Ipiranga, Ultrapar, about the results for the second quarter, the bank assesses that Ipiranga appears to be dealing with additional logistical and trading problems compared to competitors Raízen and Vibra.

The bank says that if, in the coming quarters, the margins are above R$ 70 per cubic meter, the shares should again appreciate in value. Until then, the bank maintains a neutral recommendation (perspective of valuation within the market average) given the uncertainty regarding sustainable margins. The target price for Ultrapar is R$21.

Afya (NASDAQ: AFYA)

Credit Suisse updated its cash flow statement (DCF) model for Afya, without changing the target price of US$26, compared to US$22.38 traded Tuesday by AFYA shares on the Nasdaq, or its assessment, which it maintained as neutral. The bank reduced its earnings per share (EPS) forecast for 2021 from BRL 5.56 to BRL 3. The bank says that the new model incorporates the perspective of valuation with diversification on the digital health business, in addition of the well-established medical education business, says Credit.

Electric

Morgan Stanley says it has been monitoring the level of reservoirs in Brazil, and that the water crisis has worsened over the past three months. The bank says it continues to believe that there will be no rationing (the estimate is that the probability of this happening is around between 2% and 20%) but says that the prospect of negative consequences is increasing. The outlook is better for 2022 due to the forecast of additional generation and transmission capacity.

The bank points out that the reservoirs of the National Interconnected System (SIN) are at around 26% of their national capacity, and that it should end next week, September 21, at 23%, according to the National System Operator (ONS) , compared to 24% in 2001, 29% in 2014 and 23% in 2017.

In the Southeast and Midwest regions, which correspond to 70% of the total water stored in the system, the situation is worse, at 19%, and should end the month at 15%. In the last water crisis, in 2001, it ended at 21%.

The bank says the last month of the dry season, November, is a critical time to study reservoir levels, as they are typically at their lowest levels of the year. According to the PSR, levels in the Southeast and Midwest are expected to be between 11% and 16% in November 2021, if the affluent natural energy (ENA) is at 58% of the historical average, in a pessimistic scenario , and at 70% of the average in an optimistic scenario. For the National Integrated System (SIN), the same hydrology should lead to reservoirs in between 18% and 22% in November 2021, says the bank.

In a meeting with Morgan Stanley, the PSR consultancy updated the scenarios that had been discussed in the previous month, assessing that the risk of rationing is between 2% and 20%. The PSR estimates the risk of blackouts at between 28% and 41%.

The bank also points out that this month the government created the water scarcity flag, which stands at R$ 14.2 per 100 kilowatt-hours, compared to the most expensive flag so far, the red one, at R$ 9.49. Despite this, the tariff flags should register a deficit of R$ 5 billion in 2021, according to Megawhat Consultoria. Also according to Morgan Stanley, in 2022 the bank can use other methods to cover the lack of resources in the sector, such as the allocation of R$ 5 billion from the privatization of Eletrobras, allocation of resources in tax credits, lower financial cost of Itaipu , between others. Without these measures, tariffs could increase by 16% in 2022 on average, according to Aneel.

The bank says that, due to the low levels of reservoirs and the high risk of blackouts in the coming months, investor sentiment should remain negative in the sector until the end of the year. Despite this, he says he expects the system to strengthen next year, due to the incremental transmission and power generation capacity. Thus, he says that the best channels to operate in the sector are Engie, Equatorial, CPFL and CTEEP, all of which are rated overweight (perspective of appreciation above the average). Power generators Cesp and AES should be the most negatively affected, with an underweight rating (below average). The bank says it assesses that Cesp’s valuation is attractive enough to compensate for the risk, but does not foresee a catalyst for its appreciation in the short term.

(with Reuters and Estadão Content)

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