Companhia de Saneamento Basico (ADR) (NYSE:SBS): 2Q13 results released


Dallas, Texas 09/19/2013 (Financialstrend) – Environmental sanitation service provider, Companhia de Saneamento Basico (ADR) (NYSE:SBS) is the Brazil based company with the government of the state of Sao Paulo being the majority shareholder. The company operates over 500 sewage treatment stations and collects sewage generated by more than 20 million people. In addition, it operates 45k km long sewage network and 67k km long water distribution network. The company also operates over 200 water treatment stations serving more than 27 million people including residential, municipal, industrial and commercial customer. The company provides its water and sewage services in more than 350 municipalities of the state of Sao Paulo.

On Wednesday, September 18, the stock surged almost 7.5% and closed at $10.30 with intraday range of $9.57 – $10.35. However at this price, it is trading almost 36% below its 52-week high of $16.08. Companhia de Saneamento Basico (NYSE:SBS) has market capitalization of $21.12 billion.

Earlier this month company posted its 2Q13 results, delayed by a month time due to ARSESP resolution in early August, just before the scheduled 2Q13 result release on August 8, which suspended the tariff revision process for an undetermined time period. Companhia de Saneamento Basico (ADR) (NYSE:SBS) was given 30 days period to inform the time require to revise its regulatory asset base. The company posted net income at BRL 361 million during 2Q13, significantly up from BRL 292 million during 2Q12. The company reported 14.2% growth in EBITDA at BRL 911 million during 2Q13 compared to BRL 798 million during 2Q12.

Head of Capital Market and Investor Relations of the company, Mr. Mario Arruda Sampaio, reinforced that Companhia de Saneamento Basico (ADR) (NYSE:SBS) the company has effectively counter the adverse macroeconomic conditions alike increase in interest rates in Brazil alongside devaluation of the BRL against foreign currencies and has strong fundamentals to absorb the same.

Research analysts at ZACKS have maintained ‘underperform’ rating for the stock given the steady rise in costs and expenses significantly affecting its margins.