Workflow
LatAm Transport and Capital Goods Daily Take~Off: ERJ, TUPY, AZUL, COPA, RAIL
2024-08-15 03:49

Investment Ratings - The report maintains a "Buy" rating for Copa and a "Neutral" rating for Azul, with price targets unchanged at 160/ADRandR160/ADR and R10/share respectively [4][5]. Core Insights - LATAM is negotiating to acquire up to 30 E2 jets from Embraer, expecting over 10% growth in the next three years [3]. - Tupy is expanding its contracts for heavy and light vehicles, anticipating an additional revenue of R200millionperyearstartingin2025[3].Braziliangrainproductionisprojectedtodeclineto298.6milliontonsforthe2023/24harvest,adecreaseof6.6200 million per year starting in 2025 [3]. - Brazilian grain production is projected to decline to 298.6 million tons for the 2023/24 harvest, a decrease of 6.6% compared to the previous cycle [6][7]. Summary by Sections Copa Holdings - Copa's financial estimates have been adjusted downwards by 2% for 2024 due to weaker yields and lower capacity guidance, leading to a revised EPS of 14.9 [4]. - The company is trading at a P/E of 5x, significantly below its historical average of 11x, indicating potential undervaluation [4]. Azul - Azul's financial outlook remains challenging, with profitability and top-line estimates largely unchanged as the stock price reflects existing uncertainties [5]. - The company generated R$100 million in cash flow during the last quarter, exceeding previous estimates [5]. Tupy - Tupy has secured new contracts for manufacturing components for heavy trucks and light commercial vehicles, which will enhance its revenue streams [3]. - The new contracts are expected to contribute approximately 1.6% to Tupy's estimated revenue for 2025 [3]. Brazilian Grain Production - The National Supply Company (Conab) forecasts a total grain production of 298.6 million tons for Brazil, with specific declines noted in corn production [6][7]. - Soybean production estimates remain unchanged, while corn production is expected to drop by 12.3% compared to the previous cycle [7].