Copasa Rises as Quarterly Profit Tops Estimates: Sao Paulo Mover

Cia. de Saneamento de Minas Gerais rose for the first time in three days after the water utility’s fourth-quarter profit exceeded analysts’ estimates on higher rates and an increase in delinquent bill collections.

Shares of Copasa, as the company is also known, rose 0.2 percent to 48.90 reais at the close of trading in Sao Paolo. Trading volume was 73 percent of the average over the past three-months. The benchmark Bovespa index rose 0.6 percent.

Fourth-quarter adjusted net income was 124.8 million reais, compared with the average estimate of six analysts for a profit of 108.6 million reais, according to data compiled by Bloomberg after the company released results late yesterday. Revenue rose 19 percent from a year earlier to 995.1 million reais.

The quarterly results reflect “a stronger than forecast positive impact” from a rate restructuring that began in 2011 as well as 4.8 million reais in additional revenue from collecting on delinquent bills, Oswaldo Alcantara Telles Filho, an analyst at Banco Espirito Santo SA’s brokerage unit, wrote in a note to clients dated yesterday. The utility said in a regulatory filing yesterday that it increased rates by an average 4.34 percent during 2012.

Copasa, which is Brazil’s second-largest water utility by market capitalization and controlled by the state of Minas Gerais, gained 31 percent last year. The stock trades at 12.1 times the company’s trailing earnings, compared with an average multiple of 18.1 among the Bovespa’s 69 members. The 34 percent discount has narrowed from 49 percent at the beginning of 2013, according to data compiled by Bloomberg.

Cia. de Saneamento Basico do Estado de Sao Paulo, Brazil’s biggest water utility, jumped 67 percent in 2012.