EZ Tec Jumps After Closing Biggest-Ever Sale: Sao Paulo Mover

EZ Tec Empreendimentos e Participacoes SA, a Brazilian real estate company that has trailed analysts’ revenue estimates for three quarters, rose to a two-month high after closing its biggest-ever sale.

Shares rallied 2.3 percent to 26.93 reais at the close in Sao Paulo. Trading was more than double the daily average of the past three months. The BM&FBovespa Real Estate index gained 0.5 percent.

EZ Tec sold one of two office towers it is building in Sao Paulo to Sao Carlos Empreendimentos e Participacoes SA for 564 million reais ($276 million), according to a regulatory filing late yesterday. The company said in an e-mailed statement that the transaction was the biggest in its history. The project is scheduled to be complete by the end of next year.

“The sale will boost short-term profitability,” Rene Brandt, an analyst at Banco J. Safra, wrote in a note to clients dated today. Based on the project costs EZ Tec disclosed in its most recent earnings report, the transaction “implies a boost of around 240 million reais on revenues and 126 million reais on gross profit” for the first quarter, Brandt wrote.

Sao Carlos shares rose 3.1 percent to 46.40 reais. A press official for Sao Carlos didn’t immediately respond to a phone call from Bloomberg News seeking comment.

EZ Tec’s adjusted revenue rose 26 percent to 212.6 million reais in the third quarter of 2012 from the same period of 2011, trailing the average estimate of 225.5 million reais of four analysts, data compiled by Bloomberg show. It was the third consecutive time that sales trailed forecast.

Revenue Outlook

EZ Tec expects sales this year to be little changed from 2012, Chief Financial Officer Antonio Emilio Fugazza said in a phone interview today from Mexico City, where he is meeting investors. The sale of the tower in Sao Paulo represents a “bonus” for revenue this year, he said.

“That amount is going to positively impact EZ Tec’s revenues from the first quarter of 2013 through the last quarter of 2014, when the project will be completed,” the CFO said.

Adjusted revenue rose 16 percent to 862.7 million reais last year, according to the average estimate of three analysts surveyed by Bloomberg.

EZ Tec gained 63 percent in 2012, while Sao Carlos soared 86 percent and the real estate index rose 22 percent during that same period.

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