TIMS3 (Buy, TP: BRL23, +27%) TIM B - Improving cash returns, though there should be a lot more to come
TIM Brasil updated on its cash return policy today, targeting ~BRL12 billion of shareholder returns from 2024-26. This is a strongly improving trend (BRL2.9 billion for 2023), annualizing out at a 9% yield in Brazil (where headline interest rates are falling sharply) and we see this as very supportive for the equity when combined with the strong fundamentals. At the same time, TIM will remain net cash (ex leases) over this forecast period and we see a bigger day of reckoning coming for the Brazilian capital structure – which should be an even more positive event for the stock.
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