Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– Ultrapar- UltraparParticipacoes Participacoes(UGPA3.SA) (UGPA3.SA)

Awaiting a Better Entry Point on LPG Margin Risks

PRICE TARGET R$34.00 EQUAL-WEIGHT THESIS

Base case derived using our DCF model, assuming a 12.3% WACC, based on a 6.4% after-tax ▪UGPA should benefit from the coming

cost of debt and a 15.4% cost of equity. transformations in the fuel distribution

sector, gaining market share and recovering R$32.18

margins as illegal market practices diminish.

Consensus Price Target Distribution R$27.00 R$37.00 is undemanding, following a MS PT ▪Valuation

material derating since 2024 coming fromSource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates

margins variability and a more challenging

competitive environment.

▪Still, we see a more compelling risk-

RISK REWARD CHART reward proposition elsewhere in our

coverage, given lower margins vs. its main

peer and risks for LPG returns.

BRL

R$43.00R$43.00(+42.81%)R$43.00(+42.81%)(+42.81%)

Consensus Rating Distribution

62% Overweight

R$34.00R$34.00(+12.92%)R$34.00(+12.92%)(+12.92%) 38% Equal-weight

30 R$30.11R$30.11R$30.11

0% Underweight

MS Rating

R$26.00R$26.00(-13.65%)R$26.00(-13.65%)(-13.65%)

20 Source: Refinitiv, Morgan Stanley Research

10 Risk Reward Themes

Pricing Power: Negative

View descriptions of Risk Rewards Themes here

JUL '25 JAN '26 JUL '26 JUL '27

Key: Historical Stock Performance Current Stock Price Price Target

Source: Refinitiv, Morgan Stanley Research

BULL CASE R$43.00 BASE CASE R$34.00 BEAR CASE R$26.00

Faster Margin and Market Share Gains Fuel Margin Recovery, but LPG Risks Ahead Margin Pressure Across the Board

Competitive landscape in fuel distribution Ipiranga manages to improve market share Ipiranga fails to deliver on market and