This week, several construction companies released their operating financial statements for the fourth quarter of 2023 (4Q23). For Genial, one of the highlights was the Cirella (CYRE3)which presented solid results.
According to Genial, despite some negative effects, such as an unlisted stake, Cyrela presented an annualized ROE (Return on Equity) of 13%. “Own operations and those of listed subsidiaries, such as Cury, Lavvi and PLPL, are performing well, which should boost next quarter’s results.”
OR 4Q23 by Cyrela recorded an increase in profits of 19% compared to the same period of the previous year, reaching R$ 248 million.
Even with a premium valuation compared to peers, analysts believe in significant growth for Cyrela, thanks to its solid financial structure and low leverage. Therefore, the recommendation to buy the shares, with an indicative price of R$19.
As for Eztec (EZTC3), Genial also has a positive outlook, especially after the positive 4Q23 result, which increased its annualized ROE to 7%. “Despite low leverage and controlled cash burn, the company still maintains a Neutral recommendation, due to the underutilized and tied balance sheet.”
Even with the possibility of more aggressive launches in 2024, Research predicts it will take the company years to close the gap on its competitors. “The administration could eventually succeed in this process, but it is preferable to wait for a more opportune time to invest,” says Genial, which has a target price of 18.
Cyrela: profit grows 29% in 4Q23 to R$248 million
A Cyrela developer published data for the fourth quarter of 2023 and consolidated data for the previous year. In the fourth quarter of 2023, the increase in profit was 19% compared to the same period of the previous year, reaching R$ 248 million. Compared to Q3-23, the company reported a slight 1% decline in profit.
The main highlight of Cyrela’s balance sheet is the increase in the company’s net profit: in 2023, the developer reached the figure of R$ 942 million, an increase of 16% compared to 2022.
A Cyrela’s net revenue was R$1.7 billion in 4Q23, an increase of 25% compared to the previous year’s fourth quarter. In the quarterly comparison the gain was 5%. The figure was higher than the market consensus gathered by Bloomberg, which predicted R$1.5 billion. The overall result for the year was R$6.2 billion, an increase of 16%, a number that follows the increase observed in the company’s annual profit.
The growth in numbers reflects the increase in volume of launches and sales throughout the year. The developer also reported improved margins for more recent launches, compared to 2022 projects, which helped boost results. Finally, the result of the subsidiary CashMe was also positive.
Gross margin grew 2.3 percentage points, to 33.7%. Adjusted gross margin also increased 2.3 pp, to 35.4%. Net margin decreased by 0.7 pp to 14.5%.
Commercial expenses increased by 13% to R$176 million, while general and administrative expenses increased by 8% to R$135 million. The increase is linked to the growth in operations.
OR Cyrela’s financial results (balance between financial charges and income) generated revenues of R$34 million, an increase of 28%.
OR Cyrela’s debt grew by 5% in 2023: R$5.1 billion, compared to R$4.9 billion the previous year. Corporate debt ended the year at R$3.3 billion, of which R$1 billion is included in a short-term payment window.
Financial leverage (measured by the ratio of net debt to equity) increased to 10.7% at the end of 2023 from 7.8% at the end of 2022.
Cyrela had already published its operational report for the period, which was rated very positive by construction analysts. The developer reported a 19% increase in launch volume, totaling R$1.716 billion, while net sales grew 21%, reaching R$1.825 billion.
“Despite starting the year with numerous uncertainties in relation to the local and global macroeconomic environment, we were able to deliver solid operational and financial results,” Cyrela management said, in the results presentation released on Thursday.
Last year, the company recorded an increase in cash burn: a burn of R$101 million, compared to the generation of R$33 million in 2022.
According to company management, Cyrela ended 2023 satisfied with its performance, but “knowing that 2024 is expected to be another challenging year.”
Miter and Trisul have a neutral recommendation from Genial
For Genial, the Trisul (TRIS3) had a positive result, with a focus on cash generation in the quarter. The company generated R$20 million in recurring operations and, added to the R$63 million from the sale of a real estate equity portfolio, there was a significant reduction in net debt.
“Deleveraging is expected to continue throughout the year, which could push the share price. Despite this, the recommendation is neutral (target price of R$5), with a positive bias, due to the still compromised gross margin and uncertainty about the profitability of future projects”, explains the house
For what concern Mithras (MTRE3), presented a positive deleveraging process, but margin pressure and non-recurring cash earnings offset this view in the quarter. Without the sale of the shares, the company would have a cash drain of R$22 million.
Genial’s recommendation is Neutral, with a target price of R$6.00, despite the stock trading at 0.6x P/BV, due to similarities with Trisul, with advantages for the latter. In the sector, the Cirella it’s a favorite.
Annual performance of Cyrela shares
Source: Terra
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