THE CSN (CSNA3) released a set of results considered weak by analysts. The poor performance can be explained: the mining unit.
Mining was hurt by falling oil prices iron ore, as well as rising costs. As a result, the CSN Mining (CMIN3) reported adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) of R$907 million, down 82% year-on-year and 62% on a quarterly basis.
The weakness of the mining segment was partially offset by the other business units, with steelworks remaining relatively stable in relation to the first quarter and the cement category presenting itself as a positive highlight in a quarter of strong demand and higher prices due to the readjustment in the period.
Between controller and controlled, the BTG Pactual (BPAC11) currently prefers exposure to CSN, despite the “buy” recommendation for both companies.
The bank highlights that both CSN and CSN Mineração presented positive cash flow in the second quarter, with the first company generating R$ 830 million, equivalent to a yield annualized rate of 15%, considered “decent”.
CSN Mineração, in turn, generated BRL 1.2 billion in operating cash flow, helped by a release of BRL 1.18 billion in working capital (partially reversing the outflow of BRL 2.5 billion in working capital quarterly turnover).
“Despite the payment of dividends of BRL 2.5 billion in the quarter, CMIN remains with a healthy net cash position of BRL 630 million”, highlight analysts Leonardo Correa, Caio Greiner and Bruno Lima, in a report released this Tuesday (16).
Analysts point out, however, that there are better options for generating value in other assets within BTG’s coverage universe.
In addition to the buy recommendation for both names, BTG has a target price of R$31 for CSN and R$8 for CSN Mineração.
THE Great Investments indicates the purchase of CSN Mineração. In the broker’s assessment, the bad results in the second quarter came “below the potential that the company can unlock as value”. The suggested target price is R$5, which implies an appreciation potential of approximately 30%.
For CSN’s paper, Genial recommends “hold” and sees no upside potential with a target price of R$15.
O Inter today cut the target prices of CSN (R$36 to R$25) and CSN Mineração (R$9 to R$7). The institution maintained its buy recommendation for the mining unit, while CSN’s share was downgraded to “neutral”.
The cut in CSN’s recommendation is due to the uncertainties in the foreign market with China, in addition to the possibility of a more accentuated deceleration than that priced by the market.
In the case of the subsidiary, Inter understands that, despite the lower target price and risks, CMIN3 shares are traded at attractive levels.
“We still see it as a good opportunity”, he concludes.
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