Santos Brasil soars with guidance and sales speculation

Santos Brasil’s shares on the stock exchange soared 7% today after the company announced its guidance for 2023 and the renewal of the contract with Maersk – its largest client at the company-owned terminal in the Port of Santos.

Another factor leading up to positive variation experienced by the company is the rumors over an eventual change of shareholder control of Santos Brasil.

In its management proposal for the next meeting, Santos Brasil proposed removing from its statute some articles dealing with issues related to the change of control, as well as modifying others.

For XP, these changes may be an attempt by the controlling group to facilitate an eventual sale, a topic the market has speculated about for some months. “We believe that the intention to modify these articles may indicate that a potential change in control is imminent,” wrote analyst Pedro Bruno.

The most notable change was the removal of Article 44, which prohibited a company with a stake in other container terminals from entering Santos Brasil’s voting capital.

In practice, this would prevent companies like Maersk and MSC from buying Santos Brasil — a possibility brought up by some investors.

The reason given by Santos Brasil for excluding the article is that it was a requirement of the original Santos terminal auction decree, which is no longer in effect.

“I don’t think that necessarily implies that something is out now, that there is already advanced negotiation,” a buy-side analyst said. “The company may simply anticipate painting something on the front with few strings attached.”

Santos Brasil’s stock also reacted to two pieces of news released on Friday night: the renewal of the contract with Maersk, which represents around 70% of the volume of the Santos Terminal, the company’s main terminal, and the company’s guidance for 2023, which came in above market expectations.

Santos Brasil said it expects a volume of 1.2 to 1.4 million containers in the year and an EBITDA of R$1 billion to R$1.2 billion, with a CAPEX of R$500 million to R$600 million.

See below the container throughput registered at the Santos Brasil Terminal in Santos between Jan 2019 and Feb 2023, according to DataLiner data.

Container handling at Santos Brasil | Jan 2019 – Feb 2023 | TEU

Source: DataLiner (click here to request a demo)

The two pieces of news are positive for the analyst because they remove the risk of reliance on Maersk — and demonstrate that the company can restore its “super outdated” tariffs.

In BTG’s accounts, the contract renewal with Maersk came with a 60% price increase, considering the median EBITDA guidance for the year and stable volumes. This increase is more than double market expectations, with a projected 25% to 30% growth.

The announcement comes when the market has been keeping an eye on another potential source of risk: the tender for STS10, a new container terminal at the Port of Santos that will increase capacity and thus affect tariff prices.

The market is concerned that something similar to what happened in 2013 will happen again when BTP and Embraport began operating in Porto and nearly doubled capacity from one year to the next.

“I believe the situation here is quite different,” the analyst said. “The increase in capacity will be much more gradual and not as dramatic.” Therefore, I doubt that this terminal will be operational before 2027.”

The new terminal is expected to add around 2 million containers to the port’s capacity, which is currently 5.3 million and is expected to grow in the coming years.

Source: Brazil Journal

To read the original news article, please see: https://braziljournal.com/santos-brasil-dispara-com-guidance-e-especulacao-de-venda/

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