reports
- Soomit Datta
- Soomit Datta
- Soomit Datta
MELI US (Neutral, TP: $2,000, -5%) MercadoLibre Credit cards drive big...
Top line trends were in-line/slightly ahead, with only a very slight slowdown in local FX GMV. However, there was a miss at both the gross profit level (2.5%) and, to an even greater extent, at operating income (25%, 19% ex-one-off) and net income (18%).
- Soomit Datta
TIM Brasil (Buy, TP: R$23, +43%) - Q3 24: In-line trends, Nubank and p...
TIM has delivered solid Q3s, with a small beat at EBITDAaL combined with lower capex intensity to support very strong OpFCF after leases (+23% y/y) this quarter. Growth trends are naturally easing through the year, which is captured within reiterated FY guidance, though is perhaps spooking the market.
- Soomit Datta
- Soomit Datta
NU US (Neutral, TP: $13, -8%) Nubank - Fintech disrupting Telcos? Spo...
Nubank’s MVNO launch in Brazil, first discussed earlier this year, appears imminent based on local press. We don’t think it’s a business model designed to be disruptive to the telcos but given Nubank’s huge scale (80m+ actives in Brazil) it will be worth watching and we model out a scenario analysis here.
- Soomit Datta
MercadoLibre (Neutral, TP: $2,000, +2%) - Credit card headwinds; comps...
Revisiting (and remodeling) MercadoLibre’s lending business, Credito, gives us more insight into credit card economics. In the very near-term, as low/zero NIMAL credit cards proliferate, group profitability will remain under some pressure; consensus NIMAL expectations of >30% for the coming years look exposed – we’re at 26% in 2025.
- Soomit Datta
NU US (Neutral, TP: $12.5, -2%) Nu Holdings Q2 24 Quick Take: In-line...
NU reported numbers after close which, after some heroic recent quarters, had some more moderated trends. Revenue was in-line - or a slight miss depending on which consensus you look at - originations slowed, loans missed expectations, whilst NPLs were up as expected (partly due to seasonality). NII was in-line with our expectations. Notably Mexico continues to run an ever lower loan to deposit ratio, with deposit success far outpacing loan expansion at this stage.
- Soomit Datta
TIMS3 (Buy, TP: BRL23, +32%) VIVT3 (Buy, TP: BRL61, +26%) AMX (Buy, TP...
TIM Q2s: As with Claro and Vivo, TIM delivered a robust set of Q2 results. Both revenue and EBITDA beat consensus by ~1% though at EBITDAaL TIM outperformed with a +5% beat, supported by stable Leases compared to Q1. Service revenue maintained consistent growth in-line with previous quarters (~7% y/y) from faster postpaid, and maintained negative prepaid. H1 EBITDA (and revenue) continued to trend slightly above the FY24 guidance. Despite management’s confidence in achieving targets for the year...
- Soomit Datta
- Soomit Datta
VIVT3 (Buy, TP: BRL61, +23%) Vivo - Solid underlying Q1s – headline E...
Underlying Q1 trends remained robust at Vivo, with revenue in-line (+7% y/y growth) and headline EBITDA missing (1.5%) only due to other items in the cost base (gains/sales) fluctuating. Excluding this and underlying EBITDA of +9% y/y was steady on Q4, and comparable to TIM’s +10% (reported yesterday). Vivo’s mobile service revenue was the strongest in Brazil vs peers, offset slightly by lower fixed growth (the more volatile data/IT business slowing this quarter).
- Soomit Datta
TIMS3 (Buy, TP: BRL23, +24%) TIM Brasil - Solid Q1s, trending ahead o...
TIM reported solid Q1 24 earnings overnight, coming in a shade of ahead of estimates (1% at EBITDA). Service revenue growth remains robust at >7% y/y, with some seasonality potentially impacting Q1 pre-pay revenue; EBITDA of +10% y/y and EBITDAaL +20% y/y is also very strong (and well ahead of 4% inflation), the latter enjoying historic lease reductions (though these are now sequentially stabilising). Q1 trends are tracking a touch above FY guide, potentially enabling further earnings uplift.
- Chris Hoare
- James Ratzer
Telecom Italia (Buy, €0.35, +58%) Piecing together the puzzle post-CMD
We recently attended the Telecom Italia CMD in person and the management dinner afterwards. Given the stock fell by 20%+, it’s fair to say the event didn’t quite go as initially planned. In this note we review the situation now the dust has settled a bit, and now we feel we have better visibility on the key drivers behind the operational forecasts and the below-the-line cash items.
- Soomit Datta
TIMS3 (Buy, TP: BRL23, +27%) TIM B - Improving cash returns, though t...
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 Brazi...
- James Ratzer
- James Ratzer
- James Ratzer
- Soomit Datta
TIMS3 (Buy, TP: BRL23, +27%) TIM Brasil - Solid Q4, mid-term guide hi...
TIM Brasil reported solid Q4s, with a mid-term outlook which sees consensus at the bottom of the newly guided to range for service revenue (5-6%) and EBITDA (6-8%) out to 2026 (i.e. real growth given ~3.5% inflation expectations looking forward). Given TIM’s ability to meet or beat in the past, this suggests earnings momentum can continue to be strong.
- Soomit Datta
LatAm Telcos – 2024 Outlook: Top picks Brazil (TIM and Vivo) and Megac...
After strong stock performance in 2023 we think the Brazilians will continue to perform into 2024 on the back of solid wireless fundamentals: rising prices, revenue/EBITDA > inflation, falling capex/sales – and with IOC (tax) risks in the rear view for now. Shareholder returns are also sector leading whilst valuations are attractive (notably versus quickly falling rates).
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