Gerdau: Chinese Steel Taxation Frustrates Brazilian Investors

May 07, 2024 7:56 AM ETGerdau S.A. (GGB) StockSID, USNZY4 Comments
Multiplo Invest profile picture
Multiplo Invest
450 Followers

Summary

  • Gerdau has a good track record and the most internationalized operation among Brazilian steel companies. The Brazilian steel industry is facing challenges due to the large supply of Chinese steel.
  • The government's proposed 25% tax on Chinese steel is insufficient to combat the competition, making it unfeasible to recommend buying Brazilian steel producers at the moment.
  • The company trades at the lowest EV/EBITDA multiple among its competitors. However, there is a lack of trigger to make the thesis more attractive.

Red hot steel in steelworks

Monty Rakusen

Investment Thesis

I recommend holding shares of Gerdau (NYSE:GGB). Gerdau has a good track record of results and the most internationalized operation among its Brazilian peers. Furthermore, it trades at the lowest EV/EBITDA multiple among its competitors.

This article was written by

Multiplo Invest profile picture
450 Followers
More than 5 years of experience in equity analysis in LatAm. We provide our clients with in-depth research and insights to help them make informed investment decisions.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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