Minerva 2020 Leverage Seen the Lowest Amid Meatpackers: Analyst

2020-01-22 19:32:12.304 GMT​

By Tatiana Freitas

​(Bloomberg) -- Beef producer Minerva SA should post the lowest net leverage among its peers after using the proceedings from a share offering to pay down debt, Soummo Mukherjee, senior credit analyst at Lucror Analytics in Florida, says in a telephone interview.

Mukherjee upgrades Minerva’s bonds recommendation to buy from hold as the equity offering should accelerate the company’s deleveraging.

Minerva’s net-debt-to-Ebitda ratio seen falling to 1.7 this year from 3.8 in 2019.

With proceedings from the equity offering used to reduce debt, net debt seen falling 22% to 5b reais ($1.2b) in 2020,
while adjusted Ebitda should rise 25% y/y to 2b reais supported by rising exports to China.

Based on the stock’s closing price on Jan. 21, the company could raise about 1.2 billion reais with the primary offering 

Minerva’s estimated net leverage of 1.7x in 2020 compares with projections of 2.5x for JBS and Marfrig, while BRF SA’s seen at 2.1x.

Minerva has demonstrated commitment with deleveraging and taking advantage from the favorable moment in the meat sector to do that”