By Brazil Stock Market – Simpar SA (SIMH3) soared as much as 10% in São Paulo trading on Wednesday after the holding company announced the sale of its waste management arm Ciclus Ambiental for 1.9 billion reais ($377 million), according to InfoMoney. Shares closed at 4.49 reais, their best performance in months.
JPMorgan Chase & Co. (JPM) analysts said the deal, which valued Ciclus at 9.8 times enterprise value to Ebitda on a trailing basis, would help reduce Simpar’s net debt of about 3 billion reais and unlock value from unlisted assets. The bank kept an “overweight” rating on SIMH3 with a price target of 8.50 reais.
Bradesco BBI called the transaction “impressive,” noting the Ciclus Rio sale alone generated proceeds equal to about 30% of Simpar’s market capitalization, despite the business contributing only 2% of group Ebitda. The bank expects the deal to lower Simpar’s holding-level net debt by 37%, reiterating an “outperform” recommendation with a 10-real price target.
Ciclus Rio accounts for roughly 75% of the unit’s Ebitda, while Ciclus Amazônia in Belém (PA) contributes 25%. Local reports suggest talks are underway for a separate sale of the Amazon unit, which would further advance Simpar’s portfolio reshaping strategy.
Simpar reported a leverage ratio of 3.6 times net debt to Ebitda in the second quarter, or 3.4 times when adjusting for about 3 billion reais in excess assets across subsidiaries Vamos (VAMO3), Automob (AMOB3), and JSL (JSLG3). Analysts see the divestment cycle, potentially including port assets, as central to the company’s deleveraging roadmap.
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