The shares of Movida (MOVI3) fell almost 2% around 12:50 pm this Thursday (22), against the Ibovespa, which advanced 0.30%, and also of Localiza (RENT3), its biggest competitor in Brazil, which up another 0.50%.
The fall in shares comes after Movida announced last night the acquisition of the Portuguese company Drive on Holidays (DOH), initiating its internationalization process.
For analysts, the purchase is positive, as it enters a new market, but brings the challenge of gains in scale and bargaining with automakers, as well as in Brazil, which will need to be developed.
Movida steps up to internationalization
“Positive news for Movida, as the company is taking the first step towards internationalization, which should bring expertise to further expand its operations to other regions of Europe that have a high flow of Brazilian tourists”, opens the team of analysts. of Bradesco BBI, headed by Victor Mizusaki.
BBI also highlights that the acquisition was made at an attractive multiple, 17% below which Movida itself is traded, of 4.8 times its market value over its earnings before interest, taxes, depreciation and amortization (EBITDA, in the acronym in English).
Drive on Holidays was acquired for 66 million euros – or R$ 335.6 million -, having registered an Ebitda of 16.3 million euros in the last 12 months.
“We expect Movida to use its R$3.9 billion of foreign currency cash to pay for this acquisition. The high profitability of this operation will also help to cover its balance sheet and, in addition, the purchase should not have an impact on the company’s leverage”, highlights the BBI.
Itaú BBA follows the same line, having a mostly positive view, stating that Movida is advancing in a prudent and constructive manner and that, despite the small acquisition, the multiples are attractive – as are the acquired company’s margins, “one of the highest in the world”. Portuguese sector”.
“Without compromising the company’s business plan in Brazil, the announced M&A will allow Movida to gradually increase its learning curve in the new Portuguese market with little penetration”, says the team led by Daniel Gasparete.
“The combination of Movida’s broader experience in the car rental industry and the local know-how of Drive on Holidays’ experienced management team could create a significant opportunity.”
BBA analysts also highlight the experience of DOH Executive Director Ricardo Esteves, with almost 20 years of experience, and that the Portuguese car rental market is very fragmented, offering growth opportunities.
XP sees Movida movement as neutral
For XP Investimentos, the purchase of Drive on Holidays should not change the prospects for Movida, precisely because of the small size of the share.
“DOH has a total fleet of 3,300 vehicles (totally dedicated to the Rent-a-Car segment), representing only 1.6% of Movida’s total fleet. Despite being small in size, we see the internationalization movement as unexpected (probably reflecting Simpar’s strategy of diversifying part of its revenue exposure in hard currency”, discuss the broker’s analysts.
Credit Suisse highlights that the market should view the move skeptically, something also defended by BTG Pactual.
“Local investors have been taught to analyze the car rental industry based on local scale advantages, which include bargaining power with automakers and the ability to execute to sell used vehicles. When entering a new region, the market must monitor Movida’s ability to develop these attributes on the spot”, explains the bank.
Levante, finally, raises a concern about the company’s indebtedness, with cash flow being pressured another quarter by a purchase – and the price of DOH, in Brazil, could fund the purchase of about five thousand cars of BRL 60 thousand.
“The market should pay attention, in the coming quarters, to Movida’s ability to generate cash when the pace of fleet expansion slows, in addition to keeping an eye on the cost of debt and the spread of the cost of equity in relation to the return on capital. invested”, they conclude.
MOVI3 recommendation and target price
Bradesco BBI has a recommendation outperform (above market average) for Movida common shares, with a target price of R$25 (upside of 87.8% compared to today’s opening price), as well as Itaú, which has a target price of R$26 (95.3% upside).
XP and BTG both recommend buying the paper, with target prices, respectively, at R$25 (87.8% upside) and R$28 (110.3% upside).