Expectations for the company’s sale and strategic partnerships leverage Tempo Assist’s shares
The increase reached 88.52% between May and October 2010, compared to the Ibovespa index’s modest 2.81%. That was how the shares of Tempo Assist (Tempo Participações) reflected investors' anxiety regarding the company’s next steps. It was expected that the company either be sold or merged with another strong name in the sector, as confirmed through a release of material information published by management on October 15. Tempo said it had hired UBS and BTG Pactual for "assessing and seeking opportunities for business combinations, investments and divestments for its different business segments." On October 26, the company’s shares reached their highest level since August 15, 2008, R$ 5.76.
The market expects an integral sale or the sale of one partner’s interest to a large player in the sector, which includes names such as Amil, Qualicorp, Bradesco Saúde, Mapfre and Sul America. However, management also has not excluded the possibility of acquiring another company or establishing a strategic alliance. Tempo operates in the areas of health and dental care insurance and the administration of health plans and specialized assistance to automobile manufacturers, card companies and insurers. GP Investments is the main shareholder, with an interest of 20.8%, followed by the Tarpon investment fund, with 5.6%. Most shares (41%) are currently traded on the market. The remaining shares are divided among the former shareholders of the merged companies, current managers and treasury.
The shares’ good performance in the previous months is not only due to perspectives for a market operations, according to the Fator Corretora analyst Iago Whately. In a report published in the second week of September, days after the company’s announcement, he judged that management's commitment to operational performance (cost control and expense reduction), the partnership with Caixa Seguradora and new business developments also contributed to the shares’ appreciation. Its recommendation was changed from "unattractive" to "hold" and its target price from R$ 3.60 to R$ 4.60.
"Tempo benefits directly from the performance of the economy and, especially in Brazil, the penetration of the private sector in the segment is still very low," said the analyst. The company also does well because there are few health care companies listed on the São Paulo Stock Exchange. "It's an industry that is always on foreign investors’ radar screens. It is likely that, if the inflows to Brazil and other emerging countries remains at the same volume as in recent months, the shares will probably continue to rise”, said the analyst.
So far this year through the third quarter, the company recorded net income growth of 30.1%, ending the period with R$ 700.1 million. EBITDA reached R$ 41.5 million, a 13.1% increase compared to the period between January and September of last year. The noteworthy negative was from net profit, which decreased 38.4%, to R$ 20.3 million during the period. The analyst from Morgan Stanley Javier Martinez de Olcoz Cerdan believes that the company will continue to grow steadily, but not as much as in the past three quarters, when it recorded a double-digit increase in its main indicators. In this analyst’s opinion, the current growth rate will only be maintained if the company chooses new acquisitions.
Besides contracting UBS and BTG Pactual, two other announcements involved Tempo shares. The first came in April, with the completion of the acquisition of Unibanco Saúde Seguradora, a company with an estimated 70,000 customers. The second and most striking announcement took place by the end of July, when Tempo and Caixa Seguradora announced the establishment of a partnership to create Caixa Seguradora Saúde. The goal is to offer health and dental care insurance, using Caixa Economica Federal (CEF)’s agency network to sell products. Tempo will control 25% of the new company.
In the Fator analyst’s opinion, CEF’s widespread presence is the main competitive advantage of Caixa Seguros de Saúde compared to other players of the sector: the institution serves approximately 33 million individual customers, 940 thousand businesses and 13 thousand public–sector entities throughout the country.
The agreement reinforces the path traveled by the insurance sector in Brazil. Tempo’s partnership with CEF follows the same trend as the alliance between Banco do Brasil and Mapfre, announced in May of this year. According to the agreement, the two companies resulting from the association will have Banco do Brasil agencies as their main sales channels. The same took place in the association between Itaú Unibanco and Porto Seguro the year before.