YDUQS: Feedback from Rio: delivering where it matters the most - FCFE

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YDUQS: Feedback from Rio: delivering where it matters the most - FCFE

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YDUQS

Feedback from Rio: delivering where it

matters the most - FCFE

Reiterate Rating: BUY | PO: 17.00 BRL | Price: 9.73 BRL

On-campus margins are a concern 22 May 2026

We hosted an investor meeting with YDUQS CFO (Alexandre Aquino) and the IR team in Equity

Rio, where discussions centered on confidence in FCFE guidance and margins. At the low

end, the guidance implies a FCFE yield 26Y of 19%, with investor confidence improving

Key Changesas 1Q26 showed continued DIS dilution and better receivables days. On the downside,

on-campus margins remain under pressure due to higher personnel costs, driven by mix, (BRL) Previous Current

regulation and bonus. We reiterate our Buy rating, supported by stronger confidence in Price Obj. 20.00 17.00

cash flow delivery. 2026E Rev (m) 5,739.7 5,725.2

2027E Rev (m) 6,082.9 6,031.9

2028E Rev (m) 6,629.2 6,530.1Capital allocation focused on deleveraging and dividends

With structurally stronger cash generation, mgmt. targets ND/EBITDA of 1x by the end 2026E EPS 1.59 1.51

of 2027, after which excess capital should be directed to dividends. Until then, new 2027E EPS 2.23 1.76

buyback programs remain under discussion. Potential sales of real estate are also on the 2028E EPS 3.19 2.71

radar, while disinvestment in non-core operations is not a short-term priority. 2026E DPS 0.55 0.57

Premium segment remains key for margins Flavio Yoshida >>

Research Analyst

Mgmt. highlighted that IBMEC operations still represent significant growth avenues in Merrill Lynch (Brazil)

the Northeast, Mid West and South. It expects to announce at least one new campus by flavio.yoshida@bofa.com

the end of the year, which should contribute to revenues growth.