São Paulo – Earnings season is coming to an end with the release of a number of companies exposed to e-commerce, with Via (VIIA3) reveals its numbers this Wednesday (10) after markets close and Luiza magazine (MGLU3) and Americanas (AMER3) revealed his balance on Thursday (11).
The past few months have been a real asset vortex, due to expectations that the results are no longer strong due to the high base of comparison and due to the high interest rates scenario, which mainly affects the securities in the sector, in addition to the more difficult macroeconomic scenario, which leads to more Negative expectations of consumption.
In some specific sessions, stocks posted solid gains. On Friday last week (5), stocks rose with lower interest rates and Positive signals from the free market (MELI34) in the third quarter (indicating that good winds could also affect other companies). Monday (8) was the downfall of the Strip. But, on Tuesday (9), the shot came again, this time with information from Bloomberg that Magalu, according to data from consulting firm YipitData, The company’s sales growth accelerated in October (As it covers the fourth quarter).
Notably, amid uncertainty about the economy and signs that stocks are cheap, many homes recently revised their recommendations for the e-commerce sector, as well as highlighting what they expect for the third quarter season.
Credit Suisse, for example, notes that sector results in the second half of 2021 are generally not expected to be “great.”
XP notes that, overall, there should be a slowdown in serial growth due to the strong comparison base vs. 2020. “Companies should report annual growth in the online channel, but slowing compared to previous quarters, due to the comparison base in 2020. In addition In addition, we expect to see pressures on profitability from a more challenging macro environment, along with higher costs and higher CPCs due to increased competition,” the analysts note.
Bradesco BBI also reinforces the assessment that all e-commerce names face a stronger basis for comparison, as there was a growth in gross merchandise sales (GMV) above 100% in the third quarter of 2020. As for the third quarter of 2020. Quarter, we expect to see an average The GMV-weighted growth rate of the major e-commerce platforms is 28% — a solid growth rate despite the basis of comparison and concerns about weak demand, he says.
“We expect to see margin pressures as a result of inflation in input costs, marketing costs and investments to drive traffic and promotions. Given various headwinds – despite short term headwinds – we do not expect quarterly results to be a driver for e-commerce names in our coverage world” , as they point out.
So, without considering the third quarter as a major catalyst in the short term, analysts are divided over what to expect for industry stocks, with many homes revising their numbers even before the results.
Monday , Bradesco BBI highlights retail and e-commerce actions in Brazil It has suffered significantly since the end of June, as the bank’s coverage shares plunged 32% and all categories declined. For analysts, the deteriorating outlook for the overall scenario in Brazil, amid expectations of lower GDP growth and higher interest rates, inflation and risk premiums, means poor visibility around sales growth estimates for 2022.
For e-commerce companies, there was a significant drop in the target price, from R$50 to R$39 for AMER3 assets, from B$25 to BRL 17 for MGLU3 notes and from BRL 17 to $10 for VIA. The recommendation is neutral for the three companies.
At the end of last month, among other downward revisions, the XP lowered the recommendations of Americana – Both are holding company lame 4 And for the subsidiary – from buy to neutral, maintaining the neutral recommendation of Via and Magazine Luiza, reviewing target prices downward.
XP also kept Magalu’s Neutral due to its tough short run, but it’s emerging as a favorite among e-commerce companies, albeit hoping for a better entry point on paper. .
“However, we have increased our estimates for 2022 onwards as we consolidate the acquisition of KaBuM from December 2021 as well as the funds raised in the company’s capital increase,” he says. For Magalu, the target price was raised from R$27 to R$18, with the main driver of the reduction being the increase in the cost of capital.
Chances on the radar?
On the other hand, Credit Suisse highlighted that in the recently engineered heavy selling environment, some opportunities may arise, even considering a different moment they are going through compared to the past few years.
For the analysts, there is no compelling need to buy assets, but they estimate that the market has to go much further in penetrating e-commerce and also entering an environment with many different initiatives, which could lead to strong growth in the coming years.
In a report published last week on Wednesday (3), analysts Victor Saraggioto and Pedro Pinto highlighted that Magalu’s shares were at the 2019 level, but since then the company has grown 16% in number of stores and private equity sales (1P) more than tripled and has grown market 6 times. The assets of the VIA were also at the level of July 2019, but with new management and a 5-fold growth of GMV since then.
Americana shares, in turn, are below the pandemic low, a level similar to the first quarter of 2019, when there was a 17% drop in GMV of shaky capital structure shares. At the moment, the company has cash and has managed to grow the online channel by 2.5 times, while the physical stores run well below potential.
Thus, he confirms that the sector’s results for the third and fourth quarters should not be great, but they see value in the future, with a recommendation equivalent to buying the shares of the three companies. Target price is R$42 for AMER3, $8 for LAME4, R$15 for MGLU3, and R$9.50 for VIIA3.
Looking at the results to be released in the coming days, Credit sees that the highlight of Via will be the market (3P), which is likely to reach a GMV of R$ 1.9 billion, with a growth of 130% year-on-year.
“This is the result of an acceleration in the merger of sellers, who have already crossed 100,000, and an increase in the variety of products,” he assesses. 1P should slow to a high of 8%, a number they consider strong given the 294% growth recorded in the same quarter last year. On the downside, physical stores should see a 12% drop in same-store sales (SSS). For the bank’s analysts, the important question is regarding Ebitda’s margin (Ebitda on net revenue), which analysts estimate as low as 5.5%.
On the other hand, Luiza magazine appears to be about to publish the first quarter of the past five years (excluding the pandemic period) of negative SSS in the physical store, with analysts predicting a 9% drop. “We think this has happened
They have caused some investors to withdraw from the stock,” at their discretion. They stress that it is important to highlight what the retailer has
Comparison bases have been particularly difficult, with in-store sales growing 18% in the same quarter last year.
The Internet, in turn, should be solid, with 1P expected to grow 8.5%, while 3P continues to accelerate and should represent R$3.5 billion of GMV (65% increase) in the quarter. “There could be a small disappointment in profitability, as we estimate Ebitda margin contracted by 40 basis points, to 4.8%. It is important to keep in mind that this is not very different from what Magalu has provided in recent quarters and is still in line with the company’s strategy of investing in its services,” he points out.
Finally, for Americanas, estimates are for a 5% increase in same-store sales, which defies initial analysts’ expectations of 9% growth. They estimate that “pedestrian traffic remains below full capacity and the average ticket has decreased slightly”. They noted that in the online channel they are also below the initial plan. Analysts see 30% growth in 1P to R$4.5 billion, while expecting a 3P increase of 35%. Expectations are for Ebitda margin to decline 400 basis points to 10.3%.
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