Investment Analysis 1 January 2, 2019 Recommended Portfolio – January/19
Planner Portfolio rose 13.9% in 2018, against 15.0% of the Bovespa Index
The month of December was characterized by investors' caution regarding the change of government as of this week, with foreigners still withdrawing funds from B3 for the third consecutive month and also by political instability abroad, especially in the US. This time the negative news had the United States at the center of the discussions. We highlight the continuing trade war with China, the difficult negotiation of the 2019 government budget with the US Congress, and President Donald Trump's criticism of the Federal Reserve's interest policy. We closed 2018 without any of these matters resolved. In addition, recent data from the Chinese economy show signs of slowdown.
On the domestic side, the proximity of the Bolsonaro government's ownership led foreign investors to remain cautious about the new government's first moves. December was the third consecutive month of net outflow of funds from B3, which had not been seen for a long time. B3 was also influenced by the instability in the prices of the main commodities, mainly oil, which, with the disagreement among the world's main players to control inventories and prices, causing volatility in prices, without a sign of what could happen in January with this market.
We started 2019 with great challenges. In Brazil the spotlight will be on Brasilia this year, awaiting the package of proposals and measures that the Bolsonaro government will seek to implement. The evaluation of these proposals and the responses of society and the two houses (House of Representatives and Senate) is what should dictate the direction of the market at the beginning of the year. We must also continue to bear the brunt of the discussions on the outside and the appetite or not of foreign investors for our market.
In 2018, Planner Portfolio registered a 13.9% increase compared to a 15.0% appreciation of the Ibovespa. For this beginning of the year, we continue with a conservative stance in our Portfolio, believing that, despite a strong feeling that the changes should be positive for the country, January will still have the parliamentarians in recess, and so there is still no vote. We believe it will be a month of speculation about the effectiveness of government proposals, especially on the side of on-call critics and the opposition and with attention to external issues.
Planner Portfolio Accumulated Perfornance in 2018
120 Planner Bovespa Month Diff. (%) Portfolio Index 115
January 7.99 11.14 (3.15) 110 February (1.15) 0.52 (1.67) 105 March 1.74 0.01 1.73 April 0.78 0.88 (0.10) 100 May (7.37) (10.87) 3.50 95 June (1.97) (5.20) 3.23 July 4.08 8.88 (4.80) 90 August (1.38) (3.21) 1.83 85 September 2.21 3.48 (1.27) October 6.36 10.19 (3.83) 80 November 5.78 2.38 3.40 75 Planner Portofolio Bovespa Index December (2.91) (1.81) (1.10) Planner Portofolio Bovespa Index Acum. 2018 13.90 15.04 (1.15) 70 jan fev mar abr mai jun jul ago set out nov dez Source: Planner Corretora and Economatica
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Investment Analysis 1 January 2, 2019 Recommended Portfolio – January/19
Portfolio Performance in December
The Planner Portfolio closed December with a 2.91% drop. The best contributions came from Ultrapar and M. Dias Branco. On the ther hand, Via Varejo and Braskem had poor performances in the period.
Monthly Portfolio : December 2018
Closing Weight on Portfolio Avg. Daily Fair Price Potential Oscillation - % Market Cap Company Ticker Price % Vol.?day (R$/shr.) Upside (%) (R$ bn) (R$/shr) Bovespa Contribution (R$ bn) Proposed Dec-18 Year Index
ABC Brasil ABCB4 16.88 22.00 30.3 2.49 6.74 0.00 10.0 0.25 3.5 8.1 Braskem BRKM5 47.38 62.00 30.9 (12.55) 15.28 0.87 10.0 (1.26) 36.9 73.1 Ferbasa FESA4 20.45 27.00 32.0 (6.04) 7.12 0.00 10.0 (0.60) 1.9 4.6 Fleury FLRY3 19.78 25.00 26.4 (8.43) (30.88) 0.43 10.0 (0.84) 6.2 35.7 Gerdau GGBR4 14.82 21.00 41.7 (4.26) 22.60 1.01 10.0 (0.43) 23.8 182.6 M. Dias Branco MDIA3 42.80 55.00 28.5 6.94 (17.05) 0.00 10.0 0.69 14.5 20.9 Suzano SUZB3 38.08 50.00 31.3 (6.87) 104.73 1.24 10.0 (0.69) 41.7 209.9 Telefônica Brasil VIVT4 46.23 46.00 (0.5) 2.26 4.43 1.35 10.0 0.23 75.3 91.4 Ultrapar UGPA3 53.20 55.00 3.4 12.59 (27.26) 1.98 10.0 1.26 28.9 115.5 Via Varejo VVAR3 4.39 7.00 59.5 (15.25) (44.56) 0.13 10.0 (1.53) 5.7 48.8 Planner Portfolio 19.37 7.01 100.0 (2.91) 790.6 Bovespa Index IBOV 87,887 87,400 (0.55) (1.81) 15.04 Source : Planner Corretora and Economatica
Suggested Portfolio for January 2019
For January 2019, we recomended the substitution of Ultrapar (UGPA3) by Odontoprev (ODPV3).
Monthly Portfolio : January 2019
Closing Weight (%) Avg. Daily Fair Price Potential Market Cap Ticker Price Vol.?day (R$/shr.) Upside (%) (R$ bn) (R$/shr) Bovespa (R$ bn) Proposed Index
ABC Brasil ABCB4 16.88 22.00 30.3 0.00 10.0 3.5 8.1 Braskem BRKM5 47.38 62.00 30.9 0.87 10.0 36.9 73.1 Ferbasa FESA4 20.45 27.00 32.0 0.00 10.0 1.9 4.6 Fleury FLRY3 19.78 25.00 26.4 0.43 10.0 6.2 35.7 Gerdau GGBR4 14.82 21.00 41.7 1.01 10.0 23.8 182.6 M. Dias Branco MDIA3 42.80 55.00 28.5 0.00 10.0 14.5 20.9 Odontoprev ODPV3 13.75 15.00 9.1 0.00 10.0 7.3 47.1 Suzano SUZB3 38.08 50.00 31.3 1.24 10.0 41.7 209.9 Telefônica Brasil VIVT4 46.23 46.00 (0.5) 1.35 10.0 75.3 91.4 Via Varejo VVAR3 4.39 7.00 59.5 0.13 10.0 5.7 48.8 Planner Portfolio 19.9 5.03 100.0 722.2 Bovespa Index IBOV 87,887 106,000 20.61 Source : Planner Corretora and Economatica
1. Shares held in the portfolio
Banco ABC Brasil (ABCB4): In 9M18, the bank recorded net income of R $ 336 million, up 4% from R$322 million in 9M17, positively impacted by service revenues and the decline in PDD expenses.
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Investment Analysis 1 January 2, 2019 Recommended Portfolio – January/19
Demand for credit is lower than expected, but the bank is expected to deliver growth guidance for 2018, at least on the floor of the range, between 9% and 13%.
The credit environment in 2019 should reflect the improvement of economic activity and guide business.
Banco ABC Brasil has diversified funding and competitive products that, coupled with adequate regulatory capital, should allow capture of this growth.
The default rate is controlled by 0.5%, 0.4% in the Corporate segment and 0.5% in Large Corporate, without major changes.
Braskem (BRKM5): We maintained the stock in our Portfolio, even after its weak performance in December (down 12.6%), which we attributed to the strong drop in oil prices. It is important to remember that Braskem's profit depends on the difference between the price of the raw material and final product, which does not necessarily fall when the oil quotation retreats.
In 3Q18, Braskem presented sales growth, revenue growth and a big jump in profit, even with small margin declines. This was due to increases in volumes sold in Brazil, the devaluation of the real and lower financial expenses.
Net income was R $ 1.3 billion (R $ 1.69 per share) in 3Q18, an increase of 145.7% over the previous quarter and 68.2% higher than in 3Q17.
We are still waiting for the outcome of the sale of Braskem's Odebrecht shares to LyondellBasell, which is expected to boost the stock. We recommend PURCHASE for BRKM5 with a Fair Price of R $ 62.00 / share, indicating a potential high of 30.9%.
Ferbasa (FESA4): We decided to keep the stock in our Portfolio, because we remain optimistic about the results of 4Q18 and also of 2019.
In December, Ferbasa's shares were negatively impacted (down 6.0%) by the announcement of the reduction in prices of high carbon alloy, the company's main product. The base price for 1Q19 was set at US$1.12 per pound (peso), 9.7% lower than in 4Q18 and 5.1% lower than in 1Q18. It is worth remembering that the devaluation of the real can compensate for this reduction.
Ferbasa's results in 3Q18 showed a drop in sales, but a significant increase in revenue, margins and net income, compared to the same quarter last year. This was due to the devaluation of the real in the period and the control of costs and expenses. Profit in 3Q18 was R $ 149 million (R$1.69 per share), 95.3% higher than the previous quarter and 131.8% higher than in 3Q17.
Our recommendation for FESA4 is BUY with a Fair Price of R$ 27.00 per share, indicating a potential high of 32%. Despite the good outlook for the company, FESA4 rose only 7.1% in 2018.
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Investment Analysis 1 January 2, 2019 Recommended Portfolio – January/19
Fleury (FLRY3): We continue with the stock in the portfolio believing that the weak stock performance in December (down 8.4%) can be recovered, considering that in our view, there is no reason for such a strong pressure on the stock.
the results of 9M18 were positive and continued increasing, and the scenario for the health sector and laboratory tests remains favorable with a transformation that should favor solid companies with a strong national presence like Fleury, even considering a very competitive environment.
Fleury recently announced two acquisitions of companies in the sector with an investment of R $ 170 million in the acquisition of Lafe Serviços Médicos and Santécorp Holding Ltda for R $ 15.5 million.
In 9M18, the company recorded an increase of 11.6% in net revenue totaling R$2.0 billion, an increase of 1.9% in EBITDA and a 6.8% increase in net income of R$273.4 million. On December 26, the company announced the payment of interest on capital (JCP) in the net amount of R$ 0.12669 per share. Based on the closing quotation of December 28, the return to shareholders will be 0.64%. The lawsuit is "ex" JCP from this Wednesday (January, 2).
Gerdau (GGBR4): We continue with Gerdau in our Portfolio because we expect a reversal of its recent poor performance. The shares of the sector were pressured by rumors that a reduction in the tariff of import in Brazil, could greatly increase the imports of steel. In addition, there is concern that the trade war between the United States and China will greatly impact commodity prices, such as steel. If the reducing tariffs occur, it could impact Gerdau's sales. In the case of the commercial war, there seems to be a positive route to resolving the impasse, but the risk still exists.
Gerdau posted an excellent result in 3Q18, with revenue growth, margin gains and a strong increase in profit. Net income for 3Q18 was R $ 790 million (R$ 0.46 per share), 13.2% higher than in the previous quarter and 445.7% higher than in 3Q17.
We recommend BUY for GGBR4 with a Fair Price of R$21.00 per share, which indicates a potential high of 41.7%. In 2018, GGBR4 appreciated 22.6%.
M Dias Branco (MDIA3): The company recorded 9M18 net income of R$ 584 million, 9% lower than 9M17, explained by the high exchange rate and the price of wheat as its main input. The trend for 4Q18 is of relative improvement, with the dollar falling but with residual pressure on the cost of wheat.
By 2019, with the effective reduction of costs, greater capacity utilization and the capture of the gains of synergy with the acquisition of Piraquê, the company should register growth of the operating result and improvement of profitability. Financial leverage remains low even after the acquisition of Piraquê. At the end of 3Q18, its net debt amounted to R $ 685 million, equivalent to 0.7x EBITDA.
Telefônica Brasil (VIVT4): We continued with VIVT4 in the portfolio for January considering that besides the good company numbers expected for the 4th quarter there is still a balance for dividend payment as historically has happened. VIVT4 ended Dec. 18 with appreciation of 2.3%, but in the year its performance was still weak.
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Investment Analysis 1 January 2, 2019 Recommended Portfolio – January/19
The stock has a defensive profile due to the quality of its results, a leading position in the telecommunications sector and still a good generator of cash and good dividend payer over the years. Although the industry is already mature in Brazil, there is still room for expansion of results and good dividends ahead.
Suzano Pulp and Paper (SUZB3): We continue with Suzano in our Portfolio, given the continuity of good market fundamentals. In 2018 SUZB3 accumulated strong appreciation, largely due to the merger with Fibria, which has already been approved by all regulatory agencies.
We stand out with good market fundamentals: i) Price of pulp with a high trend; ii) Supply of limited pulp and continuity in demand, mainly by China and Europe; iii) The expected synergies of the merger with Fibria, already approved by all regulatory agencies, can reach up to R$ 10 billion; iv) The devaluation of the real against the dollar benefits the company, since 100% of the revenue is linked to the US currency and v) The conclusion of the ramp up of the tissue project.
In 3Q18, the company showed good operating results, good cash generation and record EBITDA. Suzano's shares (SUZB3) closed at R$ 19.78, accumulating an increase of 104.7% in 2018.
Via Varejo (VVAR3): The announcement of the sale of part of Via Varejo's capital by the Pão de Açúcar Group helped to bring down the shares in the final stretch of December. The changes in the company's board of directors and the GPA group's announcement that it is expected to sell its full stake in the company by the end of 2019 has generated more uncertainty in the short term. On July 26, the VVAR11 Units were converted into ON shares, passing the stock code to VVAR3.
Even with weak results in the accumulated 9M18, we believe that the process of digitalization in all business fronts, following the path of the commerce and retail sector, will bring positive results for the company already in 2019. The great expectation from now on is falls on the growth of sales via application (e-commerce) and marketplace.
In 3Q18 net income was still negative (R$ 79 million) compared to a profit of R$ 46 million in 3Q17 and in the year to date the result was R$ 12 million.
2. Share included in the portfolio
Odontoprev (ODPV3): The company posted another good net result in 9M18 totaling R$ 207.3 million, an increase of 14.8% over 9M17. There was growth in the main income accounts and in the main operational indicators. The strength of the company and its leadership position in the dental plans in Latin America, with more than 7 million beneficiaries and the expectation of good results in the coming quarters justify our recommendation.
3. Share taken from the portfolio
Ultrapar (UGPA3): We took out our Portfolio after a strong recovery in November and December, with a 12.6% appreciation in December, while the Ibovespa fell 1.8% in this period. In the first half, Ultrapar presented weak results, due to non-recurring expenses (R $ 499 million), as well as a drop in sales and changes in the way fuel prices were priced. Ultrapar's results in 3Q18, compared to 2Q18, showed a
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Investment Analysis 1 January 2, 2019 Recommended Portfolio – January/19
significant recovery due to Ipiranga's higher sales and the absence of non-recurring losses. Ultrapar posted a consolidated profit in 3Q18 of R $ 323 million (R $ 0.58 per share), 34.3% higher than in the previous quarter.
Even after a strong rise in the last two months, the stock closed 2018 with a 27.3% drop.
Parâmetros do Rating da Ação Nossos parâmetros de rating levam em consideração o potencial de valorização da ação, do mercado, aqui refletido pelo Índice Bovespa, e um prêmio, adotado neste caso como a taxa de juro real no Brasil, e se necessário ponderação do analista. Dessa forma teremos: Compra: Quando a expectativa do analista para a valorização da ação for superior ao potencial de valorização do Índice Bovespa, mais o prêmio. Neutro: Quando a expectativa do analista para a valorização da ação for em linha com o potencial de valorização do Índice Bovespa, mais o prêmio.
Venda: Quando a expectativa do analista para a valorização da ação for inferior ao potencial de valorização do Índice Bovespa, mais o prêmio.
EQUIPE
Mario Roberto Mariante, CNPI*
Luiz Francisco Caetano, CNPI [email protected]
Victor Luiz de Figueiredo Martins [email protected]
Ricardo Tadeu Martins, CNPI [email protected]
DISCLAIMER
Este relatório foi preparado pela Planner Corretora e está sendo fornecido exclusivamente com o objetivo de informar. As informações, opiniões, estimativas e projeções referem-se à data presente e estão sujeitas à mudanças como resultado de alterações nas condições de mercado, sem aviso prévio. As informações utilizadas neste relatório foram obtidas das companhias analisadas e de fontes públicas, que acreditamos confiáveis e de boa fé. Contudo, não foram independentemente conferidas e nenhuma garantia, expressa ou implícita, é dada sobre sua exatidão. Nenhuma parte deste relatório pode ser copiada ou redistribuída sem prévio consentimento da Planner Corretora de Valores.
O presente relatório se destina ao uso exclusivo do destinatário, não podendo ser, no todo ou em parte, copiado, reproduzido ou distribuído a qualquer pessoa sem a expressa autorização da Planner Corretora. As opiniões, estimativas, projeções e premissas relevantes contidas neste relatório são baseadas em julgamento do(s) analista(s) de investimento envolvido(s) na sua elaboração (“analistas de investimento”) e são, portanto, sujeitas a modificações sem aviso prévio em decorrência de alterações nas condições de mercado. Declarações dos analistas de investimento envolvidos na elaboração deste relatório nos termos do art. 21 da Instrução CVM 598/18: O(s) analista(s) de investimento declara(m) que as opiniões contidas neste relatório refletem exclusivamente suas opiniões pessoais sobre a companhia e seus valores mobiliários e foram elaboradas de forma independente e autônoma, inclusive em relação à Planner Corretora e demais empresas do Grupo.
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