Why did CBA (CBAV3) plummet more than 14%, despite a better-than-expected 1Q22? – Money Times

CBA shares plummeted 14.33% in this Monday’s trading session (Image: CBA/Disclosure)

THE CBA, Brazilian Aluminum Company(CBAV3) showed good results in the first quarter of 2022, say analysts at XP Investimentos It’s from BTG Pactual.

“Investors were concerned in recent weeks whether the company would perform below expectations in the first quarter – and we are happy to see that this was not the case,” say Leonardo Correa and Caio Greiner of BTG.

However, despite the above-expected numbers, the company’s shares plummeted 14.33% in this Monday’s trading session (9), quoted at R$12.49.

Virgilio Lage, specialist in Value Investmentsexplains that the drop is due to the devaluation of commodities and stock exchanges around the world.

CBA in 1Q22

CBA announced today that it reversed the loss of R$ 133 million from the first quarter of 2021 in a net profit of R$ 426 million between January and March this year.

According to the company, the positive result in the quarter was due to the favorable scenario in relation to aluminum prices.

In the brokers’ analysis, CBA’s main highlights in the quarter were the adjusted EBITDA of R$ 552 million, the best adjusted EBITDA margin of 24%, the smallest sales volumes and higher sales prices, due to the increase in LME aluminum.

For analysts, CBA’s operating performance should improve going forward, given the elimination of the hedging policy and the hydrological improvement in Brazil, together with higher aluminum prices.

Why did stocks plummet?

The specialist from Valor Investimentos explains that, despite the profit reported in the quarter, the risk of falling commodities scared investors.

“The fall in shares was due to the market crisis as a whole. The high interest rate, very high inflation and the attempt to control the price of commodities can directly interfere with aluminum”, says Lage.

In addition, the fall of about 7% in the iron orewhich impacts aluminum, China today influenced this movement.

Lage says that the withdrawal of position in the shares of CBA shows that the market is pricing the uncertainties in relation to commodities.

Is it time to buy CBA?

For BTG, CBA is one of the most interesting actions in the sector. “CBA is one of the few aluminum assets that are fully integrated globally and an overall themed game,” they say.

“The company is at the lower end of the cost curve and differentiates itself by using 100% renewable energy sources in its production process – ready to capitalize on the future trend of global decarbonization.”

Analysts reiterate the buy recommendation for the paper, with a target price of BRL 25.


Money Times publishes informative articles of a journalistic nature. This publication does not constitute an investment recommendation.

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