MRRTY - BRF SA - A Little Light But A Lot Of Tunnel

• BRF posted mixed fourth quarter results, with slightly better-than-expected EBITDA driven by stronger results in the halal and direct export businesses, while Brazil underperformed.
• BRF's Brazilian operations are getting squeezed by higher input prices and limited pricing power, as reduced consumer purchasing power is hitting the value-added business.
• Marfrig is looking to take a more active role with its large investment stake, and has proposed a new slate of directors that would significantly change BRF's board.
• A takeover from Marfrig looks more likely now, but the timing and valuation are very much uncertain; BRF's standalone value looks to be around $5/ADR, but with significant execution/operating risks.

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