Log-In (LOGN3): Safra raises target price, but maintains neutral recommendation

Log-In (LOGN3): Safra raises target price, but maintains neutral recommendation
Log-In (LOGN3): Safra raises target price, but maintains neutral recommendation

Safra updated estimates for Log-In (LOGN3), with a new target price of R$42.50 per share at the end of 2023 (from R$30.00 previously) – which implies a potential for appreciation of 22% -, but maintained the neutral recommendation for the papers.

The bank’s justification was that analysts believe that the shares are already well priced.

Based on the new projections, Log-In is currently trading at an EV/EBITDA ratio of 8.1x for 2023E, compared to the historical average of 7.1x.

In a report, Safra highlights that the company, currently the second largest cabotage logistics operator in Brazil, benefits from the expected growth of the coastal shipping business in the country.

This is because the logistics sector is highly correlated with the activity, while the trade balance remains highly influenced by exchange rate variations.

In addition, the newly acquired road logistics operation has low operating margins compared to its peers, as well as when compared to Log-In’s coastal shipping and terminal businesses.

The main risks they see for the investment thesis are:

(i) competition:

With new incentives, promoted through the “BR do Mar” program, the barriers to market entry will be weakened, and will allow the entry of new players in the cabotage business, which can put pressure on yields from the company.

(ii) reduced space for cabotage operators in ports, given the lower price paid to long-distance players;

(iii) AFRMM monetization:

As in 2015, the company may face problems receiving its credit from the FMM fund, which can reduce its cash flow; and

(iv) difficulties in passing:

Through bunker increases, which can hurt the company’s margins.

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The article is in Portuguese

Tags: LogIn LOGN3 Safra raises target price maintains neutral recommendation

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