2023-05-19 16:53:26
Generally seen as defensive, the shares of Assaí and Carrefour accumulated falls of 40% and 30%, respectively, during the year, a period in which the Ibovespa rose 3%.
Even so, JP Morgan still doesn’t see a good entry point for either one. Worse: the bank says that the second quarter will be one of the most difficult for both.
The bank cites a survey by Nielsen according to which the segment of cash & carry ended April with a drop of 3.6% in São Paulo and Rio – the main markets for both companies. In the year, the accumulated drop is 1.5%.
In addition, food inflation should slow down the top line until the end of 2023. In the second quarter, for example, JP Morgan sees a 5% price increase ( once morest 4% of general inflation), while in the same period of 2022 food prices rose 16% (compared to 12% in the index).
JP’s prediction is that the same-store sales of Assaí fell 1.5% and that of Atacadão, 2.1%.
“We also see that the market has become much more competitive in the last year, with several players opening a considerable number of stores,” wrote analysts Joseph Giordano, Nicolas Larrain and Guilherme Vilela.
Assaí may also be harmed by the discussion of ICMS tax incentives, since 27% of the profit estimated by JP Morgan for 2024 originates from these incentives. Carrefour does not have this type of exposure.
The American bank decided to cut Assaí’s earnings per share estimate by 8% for 2024, and reduced the stock’s target price from R$14.50 to R$13.50.
In the case of Carrefour Brasil, EPS was reduced by 9%, mainly due to higher operating expenses – but the bank maintained the target price at R$ 13, helped by the company’s lower cost of capital.
JP Morgan sees the two companies’ paper trading at 11x estimated 2024 earnings. For now.
André Jankavski
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