CVC (CVCB3) Rise Continues: In-Session Action Surges 17% Due to “Judicial Restoration Effect” by 123 Millijas

Amid the bankruptcy filing by 123 Millihas, CVC shares (CVCB3) returned to trading even harder on Wednesday after gaining 6.36% in the previous day’s trading. Shares rose 17.09% to end the day at R$2.74.

The day before, news of the 123Milhas order impacted the market as a whole, especially CVCs. This represented the weakening of competitors in this field. While this will ultimately benefit the company’s stock, the company’s share price is still down 45% this year amid the expected difficulties for the company.

Part of the market expects that in the future, travel agency customers will demand more and more security when hiring travel packages, and CVC is a strong brand and this market share is expected to increase. We believe that we will be able to obtain

“Customers are there and they want to travel. Demand doesn’t decrease just because a company shuts down. Perhaps this demand, or some of it, will shift to CVC. Not only, but perhaps the market for future package sales has also shaken a bit.On the other hand, the traditional travel agency model may stand out in this context, 123Milhas’ business model is not sustainable and CVC We believe the model is already more secure,” said iHUB Investimentos Advisor Guilherme Ammirabile.

Daniel Lopez, a partner and equity analyst at Nord Research, said CVCs were going through a very bad time in terms of their capital structure, requiring issuance and a high degree of leverage. He points out that competition was a key factor in the equation.

“CVC had a lot of difficulties operating online and even had more brick-and-mortar stores. In addition, the pandemic has caused major changes in the digitization of this sector, making the costs very high. “Everyone went online and these new travel agencies started taking the market away from CVCs much faster than they could go digital themselves,” says Daniel.

Analysts say the opposite is happening now. This is because the strength of the brand is starting to take on a far greater weight than simply saving money on travel expenses.

RB Investments strategist Gustavo Cruz thinks other companies could stand out in this scenario. “There seem to be other smaller players in good financial shape. Yes, 123 miles and hubs will make them more famous,” he assesses.

CVC, which still attracts the attention of tourism companies, announced on Tuesday evening a corporate bond buy-back program of R$75 million (4th and 5th bonds).

The reason for the repurchase of the bonds is related to the terms of the bond agreement, requiring the repurchase of the bonds in the event of a capital increase exceeding R$125 million.

Bondholders wishing to sell their bonds must show up by Sept. 15, and the transaction must be completed by Sept. 22.

For Bradesco BBI, the event has been assessed as having a neutral effect, as a bond buyback was widely expected and communicated to the market after the capital increase of 550 million reais on June 15, 2023. did. Analysts said they “continue with the sole neutral recommendation and target price of 3.00 reais at the end of 2024.”

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