Shares started trading with a slight increase. (Image: REUTERS/Amanda Perobelli)
A ROAD (WEGE3) announced that it will invest approximately R$543 million to increase transformer production capacity in Brazil. The market, in turn, reacted to the news and, today (26), shares started trading with a slight increase. BTG Pactual, however, it maintained its neutral recommendation.
“These ongoing investments, combined with the new capital injection, will double the company’s global transformer production capacity by the end of this cycle. This also underscores the positive momentum in the transmission and distribution sector,” the bank assesses.
The company's plan will continue over the next two years, in manufacturing units in the states of Minas Gerais and Rio Grande do Sul. In the state of Minas Gerais, the company reports that it will invest R$370 million, expanding its transformer factory by almost 24 thousand m². In the state of Rio Grande do Sul, the investments will be directed to the factory located in Gravataí, which will receive R$128 million.
Another highlight in the report presented by BTG is the investment in technology and electric mobility, highlighting WEG's growth potential in this segment, which could represent up to 8% of the company's sales in the future.
However, the bank believes that the company's shares remain highly valued. BTG highlights that, despite strong growth and a series of strategic investments, such as the expansion of transformer production in Brazil and abroad, the company's shares are being traded at a multiple of 31 times estimated earnings for 2025, which limits the potential for appreciation in the short term.
“We expect WEG to maintain its robust operating performance in the near term, as noted in our latest model update. These improved near-term trends have already been incorporated into our analysis. With the stock trading at 31x P/E25, much higher than other companies we cover,” the firm highlights.