Cogna (COGN3), the educational group that owns Vasta, Kroton and Saber, released its results for the fourth quarter of 2023 with a loss of R$373 million due to tax effects. The company’s shares plummeted in this Thursday’s session and closed with a devaluation of 11.90%, at R$ 2.37. Thus, shares fell by more than 10% during the trading session and deepened their devaluation during the conference call with management, which began at 11 am.
As the company explained in a note, it “holds deferred tax assets, mainly formed by Tax Losses and Negative Social Contribution Bases. To realize the realization of these assets, we developed a detailed corporate reorganization plan, aiming at tax optimization by maximizing the use of losses and minimizing the effective tax rate”.
In practice, this means that, due to the organization of the Mais Médicos program, the company carried out a corporate change. According to the program regulations, the change allows more attempts to create new courses, considering different institutions applying. “We wrote off deferred income tax because it has no cash effect for the company”, mentioned the company’s CFO in the conference call to comment on the 4Q23 results.
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The drop, added to other non-recurring items, justified BTG Pactual’s analysis of weak and polluted results. Earnings before interest, taxes, depreciation and amortization (EBITDA) and net profit fell short of expectations. Even considering the adjustment, net profit would have been 46% below BTG’s projection, with a drop of 21% in the annual comparison. Operating cash flow generation was seen as positive.
Morgan Stanley, in turn, sees other factors to justify the decline. The bank’s view is that, even if the tax impact is justified, Kroton’s performance, which corresponds to Cogna’s largest segment, was below expectations, with a slowdown in growth and margin. Still, weak performance was offset by favorable seasonality at Vasta and Saber, ensuring higher multiples than peers for Cogna. “On the other hand, this makes us question whether Kroton is on the right path to continue growing based on the favorable macroeconomic environment and comply with guidance”, states the bank.
XP considered the results to be positive and chose to carry out the analysis based on adjusted net profit, excluding the impact of deferred tax assets. “The results corroborate our view that the company is on a virtuous trend, and, therefore, we reiterate our purchase recommendation for the stock”, understood the brokerage’s research.
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The tax effect was seen by Itaú BBA as having an impact on net profit, but the bank considered positive news that could boost the shares to be more present. In the analysis, BBA considered the operating results to be decent, with Vasta leading EBITDA margin expansion and Kroton with a stable margin.
The positive view was shared by Genial, which mentioned the reduction in deferred income tax as “a non-recurring item that had a strong impact on the last line of the result”. The analysis highlights that, despite the last quarter being less busy, considering that the recruitment of the on-site and medical segments occurs in odd semesters, the company presented good numbers, as a result of good resourcefulness in 2023.