Investor Day: LT Growth Opportunities Plus ST Measures to Navigate Volatility

Research evidence excerpt

Investor Day: LT Growth Opportunities Plus ST Measures to Navigate Volatility

IdeaM

Exhibit 1: JBS still trades at a significant discount to Tyson,

and we expect index inclusion to help narrow that gap

JBS vs. Tyson: 2027 EV/EBITDA (GAAP)

Bloomberg Consensus for TSN

10.0x

9.0x

~28%

8.0x Premium

7.4x

7.0x

6.0x 5.7x

5.0x

4.0x

3.0x

JBS TSN

Source: Bloomberg, Company data, Morgan Stanley Research

3. JBS Beef North America: Still challenging cycle, no news here, but division CEO sees

potential for improvements ahead. We have been guarded on US Beef (below consensus

for over two years now), and while management underscored the outlook for a tougher

cycle for a bit longer, we certainly liked to hear prospects for improvement (~3pp in

margin gains vs. peers through 2027 — more details below). Management acknowledged

that US Beef remains JBS's toughest division, with the cattle herd still at low historical

levels, and saying that major rebuilding efforts are likely to be slow and constrained by

interest rates, weather and structural/generational factors. That said, management already

sees early signs of retention, while productivity gains from better nutrition, genetics and

higher weights mean the industry does not need to necessarily return to prior peak herd

levels to recover beef output. In the ST, the biggest potential positive would be the

resumption of feeder cattle exports from Mexico (+1.5mn heads in the system, equivalent

to 2-3 years of herd rebuilding efforts, per management), and that would arguably

represent the biggest ST positive development/relief for the industry. As it pertains to the

recent spread of the New World Screwworm (NWS) in Texas, we believe management was

not concerned, similar to our views on the matter (see our thoughts on NWS here).