Eletrobras privatization should enhance actions, assess experts

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The day after the TCU (Union Court of Auditors) decision to approve Eletrobras’ capitalization process, the company’s actions already reflected the mood of the market.

On Thursday (19), the common share (ELET3) closed with an appreciation of 3.45%, quoted at R$ 44.06, while the preferred class B paper (ELET6) rose 2.54%, at R$ 43 ,20. Both assets closed at the day’s high peak, according to Tradingview data.

Specialists assess that the favorable movement for the company’s shares should continue in the medium and long term. The assessment is that it is a valuable asset with great potential.

In addition, the possibility of using the FGTS to make investments in the company is also welcomed, but investors must understand their own profile.

Results

The state-owned company announced, on Tuesday (17), that net profit from continued operations increased 69% in the first quarter of 2022, compared to the same period last year, to R$ 2.716 billion.

From January to March, net operating revenue advanced 12%, on an annual basis of comparison, to R$ 9.181 billion. Data like this corroborate the good evaluation of the actions of the then state-owned company by the specialists.

According to Gustavo Pazos, an analyst at Warren, a study carried out by the company projecting the future distribution of earnings and, already taking into account a possible increase in the company’s growth due to the new governance, the result achieved was R$ 53 per preferred share ( ELET6). Without considering any kind of value to be unlocked in the company, “as the new governance puts its new initiatives and restructurings into practice”.

“We understand that, with privatization, the shares will be worth at least R$ 53, but they can reach higher levels”, he said.

Estimates made by Refinitiv indicate that, for the year 2022, the average price of the company’s shares will reach a quotation of R$ 54.11, implying an appreciation of more than 20%, compared to the closing value of this Thursday. (R$ 44.06).

Terra Investimentos analyst Regis Chinchila mentions that the successful evolution of the capitalization process can provide gains in operational, financial and governance matters.

Chinchilla recalls the Vale case that, in just one year after privatization, profit had already increased by half. Revenue also soared, going from $3.9 to $5.5 billion. The company received after privatization more than US$ 44.6 billion in investment.

Terra Investimentos works with a target price for ELET3 of R$ 50.00 for 12 months. The analyst mentions that he has already observed “some analysis houses revising the estimate to R$ 70.00, in the best scenario after privatization”.

Ilan Arbetman, research analyst at Ativa Investimentos, says it is important for consumers to know that they are facing a company that is seeing its ability to generate value increase, a characteristic that is not currently among its multiples, showing itself as a opportunity.

The analyst predicts that the share price may evolve until the date of the share offering, scheduled to occur in the first half of the year.

Analysis of the economics analyst of the CNN Priscila Yazbek also shows that brokers and banks estimate that the share will reach an average price of R$ 54.11, an appreciation of more than 20% this year. Six buy recommendations and one neutral recommendation were counted, showing that the market sees potential for appreciation.

After validation by the TCU, the next step is to register the transaction with the Securities and Exchange Commission (CVM), a federal agency responsible for inspecting the stock market, and with the Securities and Exchange Commission (SEC), which would be the equivalent of the CVM in U.S. This is because Eletrobras has shares traded on the stock exchange of the North American country.

Is it worth investing the FGTS?

The Federal Court of Auditors (TCU) also allowed workers from any sector who have resources in the FGTS (Guarantee Fund for Time of Service) to use up to 50% of the fund to buy company shares.

This is not the first time the possibility has existed. The mechanism used for this type of process is the Mutual Privatization Fund, created in 2000, and already applied in other cases, such as at Vale and Petrobras.

According to analysts, investors must understand their profile before carrying out the operation. Arley Junior, Investment Strategist at Santander, says that assessing the API profile is important, since “the ideal allocation is associated with the investor’s risk appetite and not only the amount available for investment”.

In addition, the expert highlights that the second step is to carry out an assessment of the current portfolio, to review how and where the resources are allocated, and then combine this allocation with other investments, seeking the balance of risk, according to the profile. .

If the investor has doubts or has recently entered the stock market, to understand the profile, it is recommended that the support of a specialist, either a commercial manager or an investment advisor, who can support the review of the portfolio and indicate the percentage recommended in variable income.

If the worker wants to buy Eletrobras shares with the FGTS, it is possible to participate individually via a fund or an investment club, the CI-FGTS, which works as a pooling of resources of individuals – from a minimum of three and a maximum of 50 participants—, for investment in bonds and securities.

Investors should also pay attention to the proportion. Analysts point out that the fund is, in principle, for emergencies, and it is correct to invest proportionally.

Understand capitalization

When talking about privatization in Brazil, there is always the understanding that the Federal Government will sell a certain company to a group or company that pays the highest price.

This is not the case with Eletrobras. Its privatization will take place via the capital market: that is, the company’s shares will be dispersed among several shareholders. The government is the majority controller, with more than 70% of the shares. He will continue to be the majority shareholder, but will gain several partners through this sale.

Eletrobras will sell new shares on the market, gradually diluting the government’s share — until it holds 45%. The process ends up being a privatization because Eletrobras is no longer managed as a state-owned company, as it is today.

The company is now managed as a holding company, in which the government remains the majority shareholder, but most of its capital is diluted in the private sector.

In this way, conditions are created to provide greater investment capacity for the state-owned company, with efficiency gains, cost reductions and safer and more efficient service provision.

Eletrobras is responsible for 30% of the generation and almost 40% of the energy transmission in the country today, having been higher in the past, but ended up reducing the market because it lost investment capacity and management capacity.

Source: CNN Brasil

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