XP highlighted that Cemig shares had a positive performance recently (the increase this year is 31%). (Image: Pexels)
XP Investimentos reiterated its purchase recommendation for Copel shares (CPLE6), with a target price of R$13.80, but downgraded Cemig (CMIG4) to “neutral”, with target price of R$ 12.80.
According to the broker, the energy company from Paraná is traded at a real internal rate of return (IRR) of 12.8%, against approximately 11% of the sector average, and a spread of approximately 6p.p. for equivalent NTN-B duration.
“After its privatization in October 2023, Copel delivered significant efficiency gains across all sectors, and we still expect additional gains for the coming quarters”, said analysts Vladimir Pinto and Bruno Vidal.
“Furthermore, we have a positive assessment of your portfolio reorganization and we expect new triggers in the short/medium term, as energy prices increase and the reservoir capacity auction is approaching”.
XP downgrades Cemig
XP highlighted that Cemig's shares had a positive performance recently (the increase this year is 31% while Copel advanced only around 1%) and said that the shares are now traded at around 10.5% of the real leveraged IRR , slightly below the industry average of approximately 11%.
The brokerage said it recognized the company's efforts to focus on its core business by selling its stake in Aliança Energia to Vale, but said it adopted a more conservative outlook in relation to the other assets available for sale, including Taesa, Belo Monte and Gasmig .
“The specific circumstances surrounding each investment make these divestments more complex and unlikely to occur in the short and medium term,” he said.
XP also drew attention to the political noise, with discussions about federalization. “Despite all the efforts made by the Senate leadership, there is no indication that the federal government will take control of the company,” he stated.
“The delicate fiscal scenario further complicates the prospects for federalization. The state of Minas Gerais has other options that seem more viable to be federalized”.