Yesterday before market opened, Companhia de Saneamento Basico do Estado de Sao Paulo – SABESP (SBS), one of the largest water and sewage service providers in the world based on the number of customers, announced encouraging results for the third quarter of 2009.

During the quarter, net operating revenue totaled R$ 1.6 billion, a 2.3% increase compared to the same quarter in 2008. Costs and expenses stood at R$ 1.2 billion, 11.1% higher than the same period in the previous quarter.

EBITDA dropped 11.5% year over year to R$ 617.1 million from R$ 697.4 million in the third quarter of 2008. Earnings before financial expenses (EBIT) decreased 30.2% year over year, from R$ 662.5 million to R$ 462.6 million in the quarter. During the quarter, gross operating revenue grew R$ 31.9 million, or 1.9%, from R$ 1.72 billion in the same period of 2008 to R$ 1.75 billion in the third quarter of 2009.

The main reasons for this increase were the 0.2% tariff adjustment as of September 2009 and the 0.7% growth in total billed volume. We are keeping our Outperform recommendation on SABESP ADRs unchanged at this stage. The short-term outlook for the company is solid, due to the September 2009 tariff adjustment and the recent appreciation of the Brazilian real.

The more relaxed monetary policy in Brazil is also very encouraging. Moreover, the company’s non-cyclical and relatively low risk business model are also positive. The overall regulatory regime for water and sewage utilities in Brazil has improved considerably in recent times, reducing the regulatory risk of the industry in general and SABESP in particular.

Zacks Investment Research

1. (EOG) EOG Resources Maintains Analyst’s Rating at NeutralEOG Resources Inc. (EOG) reported third-quarter earnings of 81 cents per share, compared with the...
2. (SBS) Sabesp – Surprised by 101.86% in the Second QuarterSabesp (SBS) is seeing revenue growth as it expands its infrastructure. The stock is cheap....
3. (ELP) Companhia Paranaense de Energia Posted Positive ResultsLast week, Companhia Paranaense de Energia – COPEL (ELP), posted positive results for the second...
4. (SBS) Tariff Adjustment to Benefit Companhia de Saneamento Basico do Estado de Sao PauloEarlier last week, Companhia de Saneamento Basico do Estado de São Paulo, or SABESP (SBS),...
5. (CEO) CNOOC Maintains its Outperform RatingEarlier today, CNOOC Ltd. (CEO) reported results for the six months ended June 30. Net...
6. (CBD) Companhia Brasileira de Distribuicao – retailer of food, clothing, home appliances, and other merchandise in BrazilCompanhia Brasileira de Distribuicao (CBD) announced record earnings as they saw profits more than double....

Search Posts by Tag: Companhia de Saneamento Basico do Estado de Sao Pa | SBS | Foreign Utilities | Utilities

RSS Feeds by Tag: Companhia de Saneamento Basico do Estado de Sao Pa | SBS | Foreign Utilities | Utilities |

Other Posts by: vitalstocks | RSS Feed for this author