2025-06-09-花旗集团-博阿萨夫拉（SOJA3）_巴西Safra银行（SOJA3.SA）_2025年第一季度模型更新_等待2025_26种植季；维持买入评级_12页_266kb

Boa Safra (SOJA3.SA) Summary

Core Content

Boa Safra (SOJA3.SA) is a Brazilian seed production company with a market share of 8.5%. The company operates by acquiring parent seeds from genetics firms, multiplying them with partner farmers, and reselling to agri-input distributors after industrial seed treatment. It has seen growth since its 2021 IPO, driven by increased production capacity, the acquisition of Bestway Seeds, and diversification into other crops beyond soybeans.

Main Points

• Investment Thesis: Citi maintains a Buy rating with a target price of R$13.50 per share, based on the following pillars:

  • Potential expansion of the Brazilian agribusiness, which is expected to increase the demand for seeds and agri-inputs.
  • Market consolidation due to the highly fragmented nature of the seeds market.
  • Resilient seed prices and increasing producer share of costs.
  • Diversification into other crops, positioning Boa Safra as a one-stop-shop for agri-inputs.

• Operational Performance:

  • Boa Safra is expected to fulfill its operational capacity of 280k big bags in 2025 and increase sales volume.
  • There is a R$408mn increase in order backlog (+40% YoY), indicating strong demand.
  • The company has a healthy receivables portfolio in an industry with credit scarcity and some players in bankruptcy.

• Market Conditions:

  • The country is expected to have a record soybean harvest, which may support Boa Safra's operational improvements.
  • The company is evaluating expansion methods such as green/brownfield projects or leasing agreements.

• Valuation and Financials:

  • Current price: R$11.33.
  • Target price: R$13.50, implying a 19.2% share price return and a 23.3% total return.
  • Expected dividend yield: 4.1%.
  • Valuation ratios:
    • PE: 11.2x for 2025.
    • EV/EBITDA: 4.9x for 2025.
    • The company is currently trading at $6.5x PE and $5.1x EV/EBITDA for 2025-26E.

• Financial Projections (2025E–2027E):

  • Sales revenue: R$2,643m, R$3,159m, R$3,781m.
  • Adj. EBITDA: R$298m, R$384m, R$468m.
  • Net income: R$136m, R$137m, R$155m.
  • EPS: R$1.01, R$1.02, R$1.16.
  • Gross margin: Expected to rise from 12.1% to 15.3%.
  • EBITDA margin: Projected to increase from 9.2% to 12.4%.
  • ROE: Expected to rise from 4.6% to 6.6%.
  • ROIC: Expected to increase from 7.5% to 11.5%.

• Capital Allocation:

  • The company is expected to grow its seeds production capacity.
  • No short-term M&A activity is anticipated due to high multiples in the market.

• Risks:

  • Increased competition due to low entry barriers and high returns.
  • Dependence on partnerships with genetics and integrated producers.
  • Tax framework changes in Brazil that could affect returns.
  • Integration risks from potential M&A activities.

Key Information

• Current market cap: R$1,533m (US$276m).
• Analysts: Gabriel Barra and Pedro Gama.
• Contact details:
  • Gabriel Barra: +55-11-4009-2223 | gabriel.barra@citi.com
  • Pedro Gama: +55-21-4009-0431 | pedro.gama@citi.com

Financial Highlights

Valuation Model

• Target Price: R$13.50 per share.
• Valuation method: Two-stage discounted FCFF model.
• Assumptions:
  • Cost of equity (Ke): 19.8%.
  • WACC: 14.0%.
  • Perpetuity growth rate: 4%.
  • Growth rate (g): ~4.0% (including ~3.5% inflation and 0.5% real growth).

Analyst Disclosures

• The report includes important disclosures regarding potential conflicts of interest.
• Citi Research analysts are not registered with FINRA for non-US reports.
• The report is subject to regulatory requirements and is not to be redistributed without permission.
• The Catalyst Watch and Short Term Views (STV) are separate from the fundamental investment rating and do not affect it.

Investment Rating Definitions

• Buy: Expected total return (ETR) of 15% or more (or 25% for high-risk stocks).
• Neutral: No clear ETR or insufficient valuation drivers.
• Sell: Negative ETR.

Historical Rating and Target Price

Conclusion

Citi Research remains optimistic about Boa Safra's future, citing its growth potential, strong operational performance, and strategic positioning in the Brazilian seeds market. Despite current challenges, the company is well-positioned to benefit from industry expansion and diversification, with a solid financial outlook and increasing profitability metrics. The Buy rating reflects the company's strong fundamentals and potential for long-term value creation.