September 28, 2023
Movida (MOVI3) practically doubles its earnings in the fourth quarter;  The stock jumps more than 7%

Movida (MOVI3) practically doubles its earnings in the fourth quarter; The stock jumps more than 7%

love life (3 . movie) reported net income of R$276.7 million on the balance sheet for the fourth quarter, a 99.5% higher performance over the previous year.

The total profit last year was R$819.4 million, an increase of 250% compared to 2020, which amounted to R$233.6 million.

Following the result, MOVI3 shares were up 7.32%, at R$16.82 at 10:50 AM (Brazilian time) on Tuesday (22nd) session, as analysts highlighted very strong numbers in terms of net profit, net income and EBITDA. and depreciation and amortization (Ebitda).

According to the company, the expansion of profits came as a result of the strategy followed throughout the pandemic, focusing, among other points, on fleet expansion and renewal.

In 2021, there was an expansion of more than 50% of the fleet compared to 2020, “above the market average” growth, which made the company finish the period with 187 thousand vehicles.

Another highlight is the increase in the average rate over the year, particularly with Rent-a-Car (RAC), whose average daily price per vehicle was R$118.6 in Q421, an increase of 23.0% over Q3 of 21 and 40.6% compared to Q4 of 2020.

In addition, the company cited the merger with CS Frotas, which generated operational synergies in the GTF segment, as profit-driven factors; Movida Zero Km growth, also in GTF, which reduces costs and increases profit margins in the short term; and operational improvements.

More Balance Sheet Data for Movida (MOVI3)

Total net revenue was R$1.741 billion in Q421, an increase of 75.7% over the same period a year earlier.

Adjusted earnings before interest, tax, depreciation and amortization (Ebitda) grew 154.4% compared to the same period in 2020, totaling R$776.6 million.

Ebitda’s margin was 83.3% in the fourth quarter of 2021, an increase of 22.3 percentage points compared to the same quarter of 2020.

Return on equity (ROE) was 29% in Q421, up 19 points from Q420.

In the fourth quarter of the year 21, the gross profit amounted to 370.3 million reais, an increase of 79.1% compared to the fourth quarter of 2020.

Gross margin was 66.2% with a positive variance of 8.6 percentage points compared to the fourth quarter of 2020.

Total expenses were R$123.0 million in Q421, an increase of R$20.3 million over the previous quarter, mainly due to expenses with sales commission and credit card fees included in the expense balance with the third quarter.

The financial result was an expense of R$ 208.1 million, which represents an increase of R$ 171.2 million compared to the fourth quarter of 2020.

Debt and Investments

The net capital expenditures in the fourth quarter of 21, were R$2.1 billion, showing continuous growth every quarter. The growth of 18,700 vehicles along with maintaining occupancy rates in RAC and growth in GTF is the result of the resilient strategy adopted since the beginning of the pandemic.

The net debt of the leased company in the fourth quarter of ’21 ended at R$6.587 billion.

The leverage ratio, measured for net debt and adjusted Ebitda, was 2.9 times, an increase of 0.2 times compared to the fourth quarter of 2020.

On December 22, 2021, the Chairman of the Board of Directors informed that the management intends to propose at the Annual General Meeting (AGO) to be held in April 2022, a dividend of R$307 million.

market analysis

Levante Ideias de Investimentos highlights that the rental company has benefited from the resumption of rental demand and vehicle shortages in the market due to the strong impact of the pandemic on the supply chains of automakers, causing car production to fall below market needs. .

In addition, they noted, there was an explosion in new and used car prices, prompting more people to search for rental cars, leading the company to end the quarter with occupancy and the value of used car sales well above average. These points helped increase the average daily price for car rentals, raising the average ticket price for Movida, which reached R$118, which equates to a 40% growth compared to the fourth quarter of 2020.

The company is now betting on strengthening CS Frotas after the business merger to gain market share. CS Frotas will be under the GTF umbrella, but operate independently. Currently, Movida is the country’s market leader in the GTF segment, with nearly 20% of the market share.

At the present time, one of the biggest problems faced by the population is the purchase of cars in the market, whether because of car prices, lack of cars or the price of gasoline. Even with increased interest rates, which increases the cost of auto financing, the company has been able to navigate this wave in which the demand for rental cars has increased so much,” Aldar analysts note.

Thus, they are evaluating Movida’s positive prospects, both in the short/medium term, given market conditions
Such as the delay in the normalization of production and cost inflation, as well as in the long run, as we see a change in the mentality of the population, which is increasingly inclined to rent cars, the so-called CaaS (Car as a Service) .

Following the result, Bradesco BBI raised its target price for MOVI3 stock from R$25 to R$27, following a buy recommendation. “Our positive view is based on the following points: i) accelerated growth for Movida, despite bottlenecks in auto production in Brazil; 2) attractive return on invested capital (RoIC) of 15.3%; 3) the stock is trading at 5.2 times earnings projected for 2022, resulting in an excessive discount of 71% compared to the Brazilian average; and 4) an attractive potential estimate of 72%.”

Itaú BBA says Movida showed strong operating trends in Q421 in both RAC and GTF (the latter powered by the CS Frotas and Movida Zero Km merger), as well as strong margins. The used car segment continues to benefit from favorable winds due to the increase in used car prices. However, Itaú notes that higher depreciation and higher interest rates have overshadowed part of the strong operating trends, leading to a result of R$277 million (in line with expectations). The bank maintains a higher performance rating (above market average performance) for Movida, and a target price of R$23.

Buying opportunity? XP Strategist reveals 6 cheap stocks to buy today. Watch here.