FMX | Connect – www.fmxconnect.com - (Reported 5/13/2010)
ERDESK: We expect CETIP to report 1Q10 EPS of R$0.11; -11% below consensus earnings. Revenues should decline -0.3% Q/Q (R$65.6 mn) with lower registration volumes of CDBs and Swaps offset by higher revenues from custody of debentures.
-Registration revenues (22% of total revenues) should decline -19% Q/Q to R$12.44 mn, with:
· DI volumes increasing +3% Q/Q (R$725.5 bn) coupled with a composition more favorable to pricing should increase DI registration revenues by +6% Q/Q (R$5.25 mn)
· CDB volumes declined -4% Q/Q (R$338.3 bn), which should cause revenues to decline by the same amount to R$2.8 mn
· Registered Swap contracts declined -19% Q/Q, which should bring revenues down to R$3.2 mn.
-Custody Revenues (20% of revenues) should increase by +3% Q/Q to R$15.1 mn, with the bulk of the increase coming from an increase in registered debentures (R$286.7 bn; +4% Q/Q, contributing with R$9.3 mn in custody revenues) and a +5% increase in end user fees (R$2.2 mn)
-The Brazilian Banking Federation (FEBRABAN) reduced last April the minimum threshold to process wire transfers as TEDs (which are processed by CETIP for the CIP under a contract which expires next year). The threshold was reduced to R$3,000 from R$5,000 but it’s not clear yet whether it will be mandatory to process those wires as TEDs or banks/customers will be able to choose to continue to process them as DOCS (which are more economic for customers but they are cleared overnight). We estimate that CETIP processed 18.5 bn TEDs during the quarter (+1% Q/Q, resulting in R$6.64 mn in revenues for the company).
-CETIP is trading at 21.9x consensus 2010 earnings, a 46% premium to the local index (Bovespa).
Source: ERDESK
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