Compass Gás e Energia SA: A gas utility with an Edge

Research evidence excerpt

Compass Gás e Energia SA: A gas utility with an Edge

Investment Positives

We see Compass as one of the most compelling gas infrastructure platforms in Brazil,

combining premium regulated assets, attractive cash-flow visibility, organic growth in

Comgás, Edge-driven optionality and a balanced financial profile. In our view, the

investment case is not only about owning Brazil’s largest gas distribution platform, but

also about owning a company positioned to benefit from the next phase of gas market

development — through network expansion, sector consolidation and Edge’s first-mover

advantage in gas trading and LNG.

#1 Leading regulated gas platform with premium assets location

Compass is Brazil’s leading regulated gas distribution platform, with exposure to 7 key

DisCos and a footprint concentrated in the Center-South, the richest, most industrialized

and most densely populated region in the country. This matters because gas distribution

is highly dependent on density, income levels, industrial activity and proximity to demand

pockets — all of which support higher capex productivity, lower connection risk and

better long-term concession development. We also see Compass as a natural sector

consolidator. In our view, its scale, operating track record and strategic footprint should

position the company well for future gas distribution privatizations and M&A

opportunities, particularly as Brazil’s gas sector continues to migrate from state-owned

ownership toward private operators.

We think gas distribution regulation is attractive — in some cases even better than

power and water — because it is mostly forward-looking, with future investments

embedded in tariffs ahead of time. This gives Compass better return visibility, supports