Since last March 7, the date on which the company’s 4Q23 financial statements were drawn up Petrobras (PETR4), the market has been closely following developments regarding the non-payment of special dividends. How might this affect the shares of other state-owned companies, such as Banco do Brasil (BBAS3)? Could other smaller companies in the sector, the ‘junior oil’, represent a good alternative at this time?
According to Vinicius Moura, economist and partner at Matriz Capital, this effect of Petrobras dividends this may occur due to a general perception of political or managerial risk associated with companies under Union control.
“If investors begin to question corporate governance,… dividend policy or political interference in a state-owned company, this could lead to a reassessment of risk in other state-owned companies, potentially influencing their stock prices,” explains the analyst.
For Moura, other companies could be affected by the perception of risk that is generated around Petrobras following the issuance of the extraordinary dividends, but the impact varies depending on the specific situation of each company, its sector of activity and how it is perceived in terms of management and internal policies.
On March 8, the day after the publication of the Petrobras balance sheet and confirmation of the non-distribution of extraordinary dividends, preference shares (PETR4) fell by 10.57%, causing the company to lose R$55.3 billion in market value.
So, in addition to the issue of dividends, the economist and partner of Matriz Capital believes that also the prospects Petrobras shares in 2024 depends on several factors, including global oil prices, national and global energy policy, as well as the company’s ability to maintain its profitability and operational efficiency.
“If the company manages to positively address these issues, there could be a recovery or stabilization of its shares. However, the scenario is uncertain and depends on future developments,” he underlines.
Sidney Lima, analyst at Ouro Preto Investimentos, agrees with this thesis and believes that the shares of the state oil company are expected to continue to face volatility and pressure due to uncertainties regarding dividend policy and energy and commodity market conditions. “Volatility can be exacerbated by macroeconomic, political and regulatory events,” she points out.
Petrobras and extraordinary dividends: is it worth migrating to ‘junior oils’?
In the context of the conflict generated by Petrobras’ failure to pay special dividends, the market began to wonder whether the migration towards smaller oil exploration and production companies – the junior oil companies (or ‘junior oil’, as they are called) – could be a good alternative for investments.
In a sector report published at the end of last week, BB Investimentos even recommended buying it PRIO shares (PRIO3), but without setting a target price and without evaluating the results of the fourth quarter of 2024.
On the other hand, the bank has a “buy” recommendation. Petrobras documents, with an indicative price of R$42.00. According to analyst Daniel Cobucci, the Petrobras 4Q23 numbers they were slightly below market expectations, but the shares fell because no special dividends were announced, as the market expected.
“For the year, the company reported EBITDA 23% lower y/y, given the decline oil prices and exchange rate, in line with global competitors. We continue to see good prospects for production growth, with reduced extraction costs, which should continue to produce good cash generation and dividends,” Cobucci writes.
For Vinicius Moura, economist and partner at Matriz Capital, “junior oils” can benefit from the issue of non-payment of extraordinary dividends for several reasons. Initially, he says, the migration of investors seeking alternatives that may offer more attractive dividends or a lower perception of political risk may increase the capital available to these companies.
“Furthermore, if Petrobras reduces its investment or exploration rate, there could be market opportunities for these companies. Companies like Enauta (ENAT3) and 3R Petroleum (RRRP3) can position themselves to capitalize on these opportunities, depending on their operational capacity and growth strategy,” he assesses.
“Companies like 3R Petroleum, PRIO and PetroReconcavo (RECV3) could be among those who should benefit from the Petrobras issue at this time. However, it is important for the investor to evaluate, because, even if they are ‘junior oils’, they have different numbers, and a good analysis between them can make a big difference”, concludes Sidney Lima, analyst at Ouro Preto Investimentos.
Petrobras confirms the proposal to withhold extraordinary dividends at the meeting
The Petrobras board of directors has authorized the submission of the proposal to pay only ordinary dividends to its investors. The agenda will have to be addressed in the next Ordinary General Assembly (AGO), scheduled for 25 April 2024.
As announced last Friday (22), Petrobras’ confirmed dividends will be worth more than R$ 14.2 billion, the amount of which will be distributed only to investors who purchase shares of the oil company until the date of the meeting. Of this, approximately R$72.4 billion will be accounted for in earnings payments in 2023.
The amount will be distributed in two equal installments of R$7.1 billion. Petrobras’ first earnings payment will be made on May 25, 2024, with the second on June 20 this year.
For Vinicius Moura, of Matriz Capital, the Petrobras board’s proposal to pay only ordinary dividends to investors and its approval in the next Ordinary General Meeting (AGO) reflects a move potentially aimed at the company’s financial sustainability.
“If shareholders perceive this measure as a way to ensure the long-term financial stability of Petrobras, the decision could be welcomed. However, this could also displease shareholders who expected more immediate returns, temporarily affecting the share price” , he warns.
Short Petrobras (PETR4)? Goldman Sachs supports an “anti-state” thesis.
In a recently published report, experts from Goldman Sachs (GSGI34) began recommending selling shares of state-owned companies, including Petrobras (PETR4), Banco do Brasil (BBAS3), Cemig (CMIG4) and Sabesp (SBSP3) .
The justification for the thesis, however, is not purely and simply because of political risk and the noise associated with it, as has happened with Petrobras since the release of its 4Q23 balance sheet and failure to pay special dividends.
Goldman Sachs points out that state-owned companies have performed better than their private competitors since the pandemic. However, the trend is that, at the moment, this logic is reversed due to the current interest cycle.
In this sense, the investment bank cites the imminent start of the cycle of interest rate reduction by the Federal Reserve (Fed). So, according to Goldman Sachs, there are “downside risks to the performance of state-owned companies.”
However, experts recognize that the Petrobras It has a relatively more comfortable situation, with updated deleveraging and other healthy financial indicators, such as cash flow. Despite this, they point out that changes in Capex and possible changes in the company’s governance could affect its future.
Source: Terra
Ashley is a professional author and journalist, working at 247 News Update. She writes on various topics from economy news to general interest pieces, providing readers with relevant and informative content. She brings a unique perspective and in-depth analysis to her work.
