BOARDS: Getting ready to resume the quest for fair corporate value
Atualizado: 10 de mai. de 2020
As we approach the Covid-19 pandemic peak in Brazil by mid-May, it’s time to get ready to relaunch the businesses to a “new normal” during July. As of today, most companies already have their “strategic master plan” designed by the C-level and approved by the Board of Directors to navigate this difficult environment, including a solid and disciplined approach to investors in order to recover, fast and effectively, the corporate value lost over the past two months, and to minimize the current value gap (GViQ) to the “star-companies” in each of the 23 sectors (radar graph as of May 8, 2020).
Percentage of Potential Market Cap
The companies’ eagerness to resume and rebuild is huge, but so are the main focus points that a return to business raises. Therefore, we attempted to suggest a check list for board members:
1. An empowered committee united in a war room to lead the deployment and monitoring of the approved “strategic master plan” (cash flow management, liquidity sources, customers and employee safety, detailed value chain and production plan no minimize cash burn - if the case, innovation and reinvention now to face a "new normal", other activities and priorities);
2. Safeguard the health of employees, once the coronavirus lurks and the ability to contain its spread will dictate what happens next;
3. Focus on providing customers with great experience (the “NPS culture”) and with safety guarantees that restore trust on your product/service; and
4. Implement a second and specific group of executives (value and reputation management committee) to support the CEO and the Board in leading the actions for sustainable shareholder value creation (reborn from crisis, enlarge investor reach to ESG and zeroing the value gap).
Added and Reduced Value for Shareholders
The crocodile chart (above) identifies the movements of adding and decreasing value for shareholders in the week of May 1st to May 8th. The “closed mouth” crocodile represents the companies that added value to their shareholders. The "open mouth" crocodile represents companies that have decreased shareholder value.
Gerdau (+21.4 pp), VALE (+19.2 pp), PagSeguro (+18.6 pp), GOL Airlines (+17.1 pp) and SLC Agricola (+14.8 pp) were the positive highlights of the week, while Santos Brasil (-25.6 pp), RaiaDrogasil (-11.4 pp), Trisul (-11.2 pp), Iguatemi (-10.8 pp) and Natura (-10.4 pp) were in the opposite (negative) side.
Please download HERE the file with the spreadsheet with all details of the Value Index (IViQ) for 147 companies grouped in 23 sectors, as well as the respective Value Gaps (GViQ) to the star-companies, potential market cap and potential share price to “zero” the current Value Gap (https://docsend.com/view/924x2gaafpviargy).
Disclaimer: the indicators and gaps presented herein are intended to provide information to the market in general and do not represent recommendations for and/or requests to buy and sell any security. They are based solely on public information (CVM and B3 sites, companies' IR sites and other sites that provide target price estimates from analysts) and are, therefore, subject to change.