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XP revised its estimates for BTG Pactual (BPAC11) based on the latest quarterly results and macroeconomic forecasts, leading to a decrease in the bank’s unit target price from R$ 41 to R$ 36.
The latest figure indicates a significant potential of 12.71% following the paper market’s closure on Wednesday (5). The brokerage firm mentioned that although BTG has sustained strong performance, external factors could affect the bank, particularly considering the quick decline observed at the conclusion of December.
The active units that combine multiple company shares traded together.
XP analysts from “Money Times” stated that they maintain a positive outlook on BTG’s ability to navigate the challenging future but have a neutral recommendation due to the limited potential for value growth.
Bernardo Guttmann, Matheus Guimarães, and Rafael Nobre highlighted that BTG has resilience because of its various revenue streams. This was evident through the growth of corporate credit and asset management, which ensured stability despite the GDP contraction in 2020.
The investment bank is expected to see an 18% increase in net profit annually, with diversified gains potentially offsetting a projected decrease in Investment Banking.
Analysts anticipate that leverage will continue to be the primary factor driving ROE, while revenue should be more concentrated to reduce the net margin for businesses requiring risk-weighted assets.
XP suggested that the bank’s potential to achieve much higher returns on equity in the future could be restricted by the interaction of these two factors.
If the country’s macroeconomic situation improves more quickly than anticipated, BTG Pactual’s business in areas with lower risk-weighted assets will benefit from the recovery in economic activity, according to the broker.
BTG Pactual Background (BTRA11) transforms into a land reclamation device.
The FII in agricultural lands of BTG Pactual bank has experienced two losses due to legal proceedings in the past two years. Now, it is showing signs of being able to recover the value of its shares, becoming an attractive option for investors.
The BTRA11 fund, with over 13.4 thousand investors and managing R $ 370 million, has seen a 13% growth since the start of the year. However, its current trading value is only 43% of its asset value, with shares at R$ 47.94, down by 50% since its 2021 IPO.
Investors are anticipated to gradually recognize the fund’s ability to regain assets, particularly with the restoration of ownership of farms previously operated by defaulting producers, as reported by “TheAgriBiz” website.
The BTG fund operates based on sale and leaseback models, where it purchases land and leases properties to producers for a specific duration, driving the process.
The producer has the choice to repurchase the land after a 10-year operation period if all payments are up to date in the case of BTRRA11.
Reclaiming ownership of the land will be challenging for the BTG fund due to the specialized approach they have taken to handle complex situations and successfully regain possession of farms in a short period.
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