2024-03-26 11:29:11 ET
Summary
- The company has been delivering excellent results since its turnaround in 2019, with cost reduction, lower leverage, and prospects for further improving its EBITDA margin.
- Despite this, the company is traded below the multiples of its international peers, even though it is the most profitable and has the best return on equity.
- The discount compared to peers is due to the political risk, which increased with the news of the company's possible federalization, but which in my view is a buying opportunity.
Investment Thesis
I recommend buying Companhia Energética de Minas Gerais - CEMIG ( CIG ), which saw a drop in prices after the Minas Gerais state government opened the possibility of federalizing the company with the aim of paying part of its debts. However, the complexity of the operation has a high chance of making the business unviable....
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CEMIG: Remote Chance Of Federalization Opens Up A Great Buying Point