Usiminas SA: Downgrade to Underperform – earnings upgrade trend has run its course

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Usiminas SA: Downgrade to Underperform – earnings upgrade trend has run its course

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Usiminas SA

Downgrade to Underperform – earnings

upgrade trend has run its course

Rating Change: UNDERPERFORM | PO: 9.50 BRL | Price: 10.85 BRL

Risk-reward uncompelling as support for hikes withers 15 June 2026

We downgrade Usiminas to Underperform from Neutral on concerns over (i) weak steel Equity

demand, (ii) high inventories, (iii) cost pressures ahead and (iv) a lack of conviction over

additional price hikes (if implemented) translating to further earnings upgrades. Our

Key Changeschannel checks indicate that steelmakers have struggled to implement May hikes for

flats (now pushed to June). Without additional hikes, margins would likely compress (BRL) Previous Current

sequentially in 3Q26 (a concern). Given lack of conviction over full-passthrough of June Inv. Opinion C-2-8 C-3-8

hikes, we believe risk-reward from an earnings momentum perspective seems more Inv. Rating NEUTRAL UNDERPERFORM

eschewed to the downside at this point. We reflect this in our model by reducing steel Price Obj. 11.00 9.50

price hikes in 2Q and 3Q by 1-2p.p, which drives our 2026E EBITDA to R$2.8bn from 2026E Rev (m) 24,875.5 24,685.1

R$3bn previously. This in turn leads our PO to R$9.5/shr (US$1.9/ADR) from R$11/shr 2027E Rev (m) 26,415.7 26,215.0

(US$2.2/ADR) previously on unchanged valuation methodology. 2028E Rev (m) 27,445.2 27,234.0

Macro less supportive + cost pressures keep us cautious 2026E2027E EPSEPS 1.741.73 1.631.60

With elections approaching in October and the interest rate cutting cycle likely nearing 2028E EPS 1.90 1.76

its end, we see limited appetite for an uptick in order intake, suggesting demand should 2026E DPS 0.28 0.25

remain soft in the coming months.