The Point for Latin America

Research evidence excerpt

The Point for Latin America

In Brazil, better-than-anticipated margin performance in 2Q26 and a favorable

domestic/special steel mix shift are driving revenue/t improvement and

supporting upward estimate revisions for the remainder of 2026 and beyond. NAm

continues to demonstrate structural resilience, with elevated price levels expected

to persist through 2H26 and into 2027, underpinned by a more neutral USMCA

regulatory backdrop and reduced political uncertainty, at least until the next U.S.

election cycle. WK consumption is expected to weigh on FCF in 2Q26, driven by

higher inventory levels, tax payments, and debt service obligations; however, this

dynamic is transitional, with materially stronger cash generation anticipated in

3Q26 and 4Q26 as inventory normalizes. On balance, we view the quarter as a

positive inflection point with improving fundamentals setting up a stronger 2H26.

Gabriel Barra

Copasa (CSMG3.SA) - Updating our numbers post-privatization; TP up to

R$79.0/sh

We have updated our numbers for Copasa to incorporate some important changes

after the conclusion of its privatization process. We are keeping our Buy rating

while raising our TP from R$55 to R$79. We currently see the name trading at an

implied 11.5% real IRR. The most important changes came from RAB reassessment,

new sewage connections, concession extension and the new opex efficiency

sharing mechanism. We also welcome Equatorial as Copasa’s reference

shareholder, as we believe its strong operational track record should support the

company´s turnaround execution, much like the transformation we observed at

Sabesp.

Joao Pimentel | Felipe Lenza

Smartfit (SMFT3.SA) - June LatAm Gym Tracker: Openings Accelerate in Brazil,

Led by SMFT and Panobianco; SMFT Continues to Lead in MX