Minerva (BEEF3): US listing could lead to a stock reclassification, analysts say; assets go up

Minerva (BEEF3), one of the largest protein companies in the country, announced a material fact on the
last Thursday (13) that its Board of Directors authorized the executive board to start studies for a possible migration of its shareholding base abroad, listing its shares in another country. With the news, BEEF3 shares rose 3.27%, at R$ 10.43, around 12:45 pm (Brasilia time).

The company did not provide further information about the possible migration and said that if it decides to go ahead with the process, it will release new communications to its shareholders and the market.

According to a source told Reuters, Minerva is inclined to change its listing from the local stock exchange B3 to the US Nasdaq.

We are looking at various bags. Nasdaq is one of them and it seems to make the most sense,” said the source, on condition of anonymity.

Minerva is the latest in a series of Brazilian companies looking to move to the United States and list on a US exchange, fueled by a desire for broader investor access, lower corporate taxes, more flexible regulations for shareholders. more efficient controllers and capital markets.

Santander sees a possible listing of Minerva abroad as positive. The bank says listing in a foreign market like the US, where meatpackers trade at higher valuations, could allow Minerva to trade at a higher multiple than its historical average.

Additionally, the bank notes that around 85% of Minerva’s revenues in Q3 2021 came from foreign markets and 55% of Minerva’s shareholder base is outside Brazil, supporting an overseas listing.

Thus, Santander reiterates its buy recommendation for Minerva, with a target price of BRL 16 per asset, or a potential rise of 58.4% compared to the previous day’s close.

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Also evaluating the announcement positively, Morgan Stanley points out, however, that it is still necessary to have more details on how the operation and the new structure would be “before jumping to conclusions”.

“We understand the logic of changing Minerva’s domicile given the global and exporting nature of the company (that is, only about 15% of revenues are generated internally in Brazil). We also believe that a potential listing in a market such as the US could generate significant shareholder value, given access to a much broader base of investors and capital markets, and could also support a reclassification of the shares, in our view.” , evaluate.

They cite that, based on conversations they have with investors, low liquidity has sometimes been a deterrent for some industry observers to embrace the optimistic thesis about Minerva, whose stock is Morgan’s top pick in the sector.

In addition, potential tax benefits arising from possible changes in the corporate structure may also be evaluated in the future, analysts believe.

“For example, in the past, JBS (JBSS3) has considered moving its headquarters to other geographies in order to, among other things, reduce corporate taxes. That said, we still need more details (…). We observed, for example, that the same news mentioned above raised the possibility of new classes of shares appearing in the context of listing abroad”, points out the bank. Morgan has a target price of BRL 16.50 for the assets, or a 63% upside potential compared to the day before closing.

Levante points out that the migration to the US stock market could lead Minerva to have a more accurate pricing. This would make sense for the company in a scenario where it depends little on the Brazilian macro environment.

The analysis house recalls that this is not the first measure designed by Minerva to unlock the value of its shares. In 2021, there were news published in the media regarding the company’s delisting (OPA), demonstrating
great dissatisfaction of its controllers with the valuation of the company in the market. However, the idea was later rejected by the company.

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About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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