Can't See The Wood For The Trees?

研报英文原文证据摘录

Can't See The Wood For The Trees?

r WEG to switch its reporting currency to US$ to improve WEG - 1Q26 divisional sales heatmap (US$ mn) YoY QoQ

comparability with peers. SalesIndustrialabroadElectro Equip (IEE) Abroad 16% -3%

Energy GTD Abroad 13% -10%

Shifting revenue mix sustains margins. We estimate that renewables represented cBRL1bn of OtherTotal salesAbroadabroad 15%10% 13%-5%

revenues (c10% of the total) in 1Q25 but were almost negligible in 1Q26. We estimate renewables DomesticIndustrialsalesElectro Equip (IEE) Brazil 12% -13%

have 5-10% margins, well below WEG's 22% average EBITDA margins. As such, this change in Energy GTD Brazil -30% 1%

revenue mix, while dragging top line, has strengthened WEG's profitability - which we believe the OtherTotal domesticBrazil sales -12%7% -6%-4%

market has also overlooked. IndustrialTotal DivisionalElectro salesEquip (IEE) total 15% -6%

Energy GTD total -10% -6%

TD capacity expansions on track underpin growth re-acceleration from 2H26. We continue to see OtherWEGtotaltotal (US$) 3%8% -5%3%

WEG’s growth re-acceleration from 2H26 underpinned by production capacity expansions in the

. WEG total (BRL) -6.1% -7.6%

Power Transmission & Distribution (T&D) area. This should allow WEG to double the production Source: Company data; Jefferies

capacity of high-margin power transformers. Importantly, management has recently confirmed that

these projects remain on track: the Betim plant in Brazil is set to be ready by mid-year, followed by Exhibit 2 - WEG - share price performance vs

peers and LatAm indeces (in US$)

the new plant in Colombia by end-26 and the Mexico plant ‘at the beginning of 2027’. 25.0%

19.6%

20.0%

9.9% 11.5%Keeping our Buy rating on WEG. Marking to market on FX, we lower our 2026-27 EBITDA ests by 15.0%10.0%

c4%.