SBS - SABESP: A Company With Good Prospects In A Risky Economic Environment

2024-06-01 05:09:43 ET

Summary

• This water utility is undervalued and operates in a region with a rapidly growing population.
• The economic environment in Brazil poses risks for investors due to inflation and political instability.
• SABESP's expansion within the state of Sao Paulo and potential efficiency improvements through privatization are positive factors.

Companhia de Saneamento Básico do Estado de São Paulo ( SBS ) is currently undergoing a positive change - the privatization process. At the same time, the economic environment in which the company operates is quite risky for the investor. The stability of investments is hampered by both the inflationary economic environment and the political climate of the country, where the president with a left-wing worldview is currently in power. I remain wait-and-see regarding SABESP's prospects. In order to invest in this company in a phase of change, confirmation should be found in positive changes in SABESP's results.

Company Overview

SABESP provides water and sanitation services in 376 municipalities in the state of Sao Paulo, Brazil. There are 10.1 million water service customers and 8.6 million sewage service customers. The company was founded in 1954. It was listed on the Sao Paulo Stock Exchange in 1997 and on the New York Stock Exchange in 2002 as ADR....

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