Citi raises Brazilian Cosan's rating to "buy"

(SeeNews) – Jan 28, 2013 - Citi Corretora has lifted its recommendation on Brazilian sugar and ethanol producer Cosan (SAO:CSAN3) to "buy" from "neutral", simultaneously boosting the company's share price target to BRL 48.5 from the previous BRL 38.5.
The upgrades mirror the projected by the brokerage house growth in Cosan's profit and the probable simplification of the company's shareholder structure, Citi outlined.
Also, after several years of hefty investments, Cosan is now reducing its capex. According to the brokerage, this will further reduce the company's debt and boost dividends.
Moreover, ethanol demand and prices are seen to rise this year, as anhydrous ethanol blend to petrol (gasoline) is set to go up to 25% from the current 20% in order to mitigate a planned readjustment in local petrol prices.
As for the simplification of the company's shareholder structure, Citi believes that one of Cosan's units, Cosan Limited (SAO:CZLT11), will be wiped out, a move that would mark an improvement in the company's corporate governance system.
By 1017 local time today, Cosan's shares had lost 0.49% to BRL 44.27 on the Sao Paulo stock exchange.

(BRL 1.0 = USD 0.493/EUR 0.366)

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