SLC Agricola‘s Strategic Acquisition Faces Earnings and Leverage Challenges

Research evidence excerpt

SLC Agricola‘s Strategic Acquisition Faces Earnings and Leverage Challenges

Idea

June 28, 2026 10:23 PM GMT

Morgan Stanley C.T.V.M. S.A.+MSLC Agricola S.A. | Latin America Julia Rizzo

Equity Analyst and Commodities Strategist

SLC Agricola's Strategic Julia.Rizzo@morganstanley.comJulia Habermann +55 11 3048-6114

Research Associate

Julia.Habermann.Oliveira@morganstanley.com +55 11 3048-6096

Acquisition Faces Earnings and

SLC Agricola S.A. (SLCE3.SA, SLCE3 BZ)

LatAm Agribusiness | BrazilLeverage Challenges

Stock Rating Equal-weight

Industry View In-Line

What’s Changed Price target R$16.00

SLC Agricola S.A. (SLCE3.SA) From To Shr price, close (Jun 26, 2026) R$13.17

Price Target R$20.00 R$16.00

We lower our PT to R$16 from R$20 and remain EW. While the

Radar land deal is strategically sound, we expect investors to

focus on near-term EPS dilution, higher leverage, negative carry

and El Niño weather risk. A sell-down/JV could mitigate this, but

visibility is limited.

We lower our PT for SLC to R$16 from R$20 and remain EW. SLC’s exercise of its

preemptive right to acquire Radar’s Bloco Mato Grosso farmland portfolio for R

$1.85bn confirms the asset’s strategic value, but worsens near-term risk-reward. The

key issue is not asset quality, but negative carry, higher leverage, and timing. We

now incorporate the transaction on balance sheet, reduce our earnings estimates

and update our WACC to 15.5% from 14.1%, with the PT reduction primarily

reflecting the lower earnings base and incremental debt from the acquisition.

The transaction is sizeable and strategically sound. SLC will acquire ~41k ha of

prime Mato Grosso farmland, implying ~R$45k/ha on total area and ~R$64k/ha on

~29k arable ha. The asset is scalable, high quality, and aligned with SLC’s long-term