Compass (PASS3 BZ): Initiate at Buy: Compass at the right direction

Research evidence excerpt

Compass (PASS3 BZ): Initiate at Buy: Compass at the right direction

sizeable diesel

imports. Key challenges stem from policy and legislative inconsistencies following recent 52-WEEK PRICE (BRL)

market liberalisation. This year we have seen regulatory setbacks, mainly in midstream 31.00

(where Compass has no exposure). Over the longer term, we see upside to our TP from

27.00

cheaper and more diversified supply – non-associated gas from pre-salt fields and

potentially imports from Argentina or Venezuela. 23.00

07/25 01/26 07/26

Gas commercialization – the contentious topic: We expect Edge’s EBITDA to Target price: 30.00 High: 27.39 Low: 24.21 Current: 24.84

increase at a c14% CAGR from 2025 (in real BRL terms) and to account for 25% of Source: LSEG IBES, HSBC estimates

group EBITDA by 2030e (vs 13% in 2025). Delivering this will require not only

securing incremental gas sale contracts but also sustaining robust realised margins – Lilyanna Yang, CFA Analyst, LatAm Oil & Gas, Utilities, Petrochems

two key drivers with limited visibility today. HSBC Securities (USA) Inc.

lilyanna.yang@us.hsbc.com

Where we differ from the Street: Our Buy rating is in line with consensus but there are +1 212 525 0990

only nine ratings. Our 2027-28e forecasts are below the Street’s and our BRL30.00 TP is Arthur Gennari*

Analyst, LatAm Oil & Gas, Utilities, Petrochems

the lowest vs the Street’s BRL34.00-38.00 range, which we attribute to a more Banco HSBC S.A.

conservative revenue and margin growth trajectory at Edge. Our valuation for the Sao arthur.gennari@hsbc.com

+55 11 2801 2616

Paulo gas disco at an implied 1.35x EV/2026e is in line with the valuations we carry for

Brazilian electric utilities; the controversial topic is how to value Edge.