Bradesaude SA (SAUD3.SA): A solid vehicle to navigate still-high rates in Brazil, with optionalities that are not priced in; Upgrade to Buy

研报英文原文证据摘录

Bradesaude SA (SAUD3.SA): A solid vehicle to navigate still-high rates in Brazil, with optionalities that are not priced in; Upgrade to Buy

Goldman Sachs Bradsaude SA (SAUD3.SA)

Dental business (Odontoprev): Quality franchise but more limited room for DLR improvements

Odontoprev (~13% of SAUD earnings) remains a high-quality, capital-light asset

within Bradsaúde’s portfolio, but we adopt a more cautious stance on margin gains

going forward. We continue to recognize Odontoprev’s structural strengths—its

leadership in dental benefits, strong brand equity, and Bradesco Saúde’s 4.6k

distribution channels, which underpin solid dividend generation (HSD in recent years)

and ROE over 40%. Going forward, we expect healthy net adds trends to continue (we

expect 5%/4.5% base growth in 26E/27E), as the SME segment should remain the

growth engine of the company, boosted by the capillary-like network of Bradesco

Saúde’s national distribution. At the same time, we do not expect further

improvements in the company’s Dental Loss Ratio in 2026 (we expect 39%, flat YoY)

as the scope for additional cost efficiencies appears increasingly limited after years of

margin optimization. While we do see potential upside should the company accelerate

penetration in the SME segment, which would be supportive of our Buy thesis given its

more attractive economics (~27% DLR, 24pp lower than consolidated level), we prefer

to take a cautious stance on segment growth, as Brazilian SMEs are still navigating a

difficult environment of tight monetary conditions and weak business confidence (retail

sentiment is particularly soft) and smaller firms might have reduced appetite and

capacity to take on or maintain benefit plans, which might weigh on Bradsaúde’s space

to increase net adds in this segment.