The Point for Latin America

Research evidence excerpt

The Point for Latin America

Point |

Thursday, 02 July 2026

Top Call | Company | Industry | Global | Key Rating and Target Price Changes

Top Call

Brazil Agricultural Products - 4Q26 S&E Model Update: Keep Neutral on SMTO3

and JALL3

We updated our S&E models (Jalles and São Martinho) post 4Q26 results, with

fresh macroeconomic estimates, update guidance on 2026/27 crop season and

our view on both. We keep our Neutral view, mainly supported by our forecast of

weak sugar and ethanol prices in the upcoming periods, noting the sharp decrease

in ethanol prices after the advances in sugarcane crushing and the delay on the

increase of anhydrous ethanol mandatory blending into Gasoline C. Even with the

increase in anhydrous ethanol mix, which we see with a great likelihood to occur

soon, this should be insufficient to lead ethanol prices to increase in a relevant

manner. We keep our view that the main upside trigger lies on likely higher sugar

prices, reflecting the higher ethanol production mix in Brazil and potential effects

of a strong El Niño.

Gabriel Barra

Latin America Transportation - Stock Ranking: Airlines Unchallenged at the Top;

Weighing on Interest Rate Exposure

Airlines in Latin America remain unchallenged at the podium of our preferences.

After showing resilience to fuel price spikes, we believe stock prices have not fully

reflected the upside potential from lower fuel, which could reignite the discussion

around profitable growth. On the Brazil side of our coverage, market reaction in the

past three months seemed mostly driven by interest rate moves. Given the

deterioration in expectations, we performed a sensitivity analysis that shows that

exposure depends not only on leverage but also on FCF potential (and debt profile,

in the case of toll roads).