Movida Participações S A : Relatório de Agência de Rating - Relatório Completo - S&P* (versão em Inglês)

Movida Participacoes S.A.

Primary Credit Analyst:

Thais R Abdala, Sao Paulo;[e-mail]

Secondary Contacts:

Felipe Speranzini, Sao Paulo + 55 11 3039 9751;[e-mail] Vilhena, Sao Paulo + 55 11 3039 9727;[e-mail]

Table Of Contents

Credit Highlights Outlook

Our Base-Case Scenario Company Description Business Risk Financial Risk Liquidity Covenant Analysis

Environmental, Social, And Governance Group Influence

Issue Ratings - Recovery Analysis Reconciliation

Ratings Score Snapshot

Table Of Contents (cont.)

Related Criteria

Related Research

Movida Participacoes S.A.

Business Risk: WEAK

Vulnerable Excellent

Financial Risk: SIGNIFICANT

Highly leveraged Minimal

Brazil National Scale brAA/Stable/--

Credit Highlights

Key Strengths

Key Risks

Solid position as one of the three largest players in the Brazilian car	Highly competitive rent-a-car (RaC) market, resulting in low pricing power;
rental and fleet management market;
Ability to preserve liquidity and leverage, adjusting fleet size by	Limited scale and geographic diversification, operating a total fleet of about
increasing used-vehicle sales; and	118,000 cars;
Adequate access to credit in the local market and support from its	High capex requirements to sustain fleet renewal and expansion; and
parent,
Exposure to cash flow volatility in the RaC segment, which under normal
conditions generates about 50% of total cash.

High exposure to the RaC segment implies risks of greater earnings volatility. Since Simpar's (formerly JSL S.A.) acquisition of Movida in 2013, the company has been investing to expand its fleet substantially to meet the increasing market demand in the RaC and fleet management and outsourcing (GTF) segments. While the latter segment has been growing rapidly over the past few years, the RaC segment still represents about 60% of the company's total fleet. This reduces earnings predictability and raises risks of cash flow volatility due to the segment's following characteristics: short-term contracts, fierce competition, and cyclicality of demand among tourists and corporate customers.

Movida Participacoes S.A.

Chart 1

Solid position in Brazil, but the company lacks the scale and diversification of larger players. We view Movida as well positioned in the Brazilian market, given that it's one of the three largest players with high brand recognition and increasing scale. Nevertheless, Movida operates only in Brazil, with much lower asset and revenue base than those of its peers, such as Localiza Rent a Car S.A. (BB+/Stable/--; brAAA/Stable/--) that has a leading position in the Brazilian market, and Enterprise Holdings, Inc. (A-/Stable/A-2), which is the world's largest car rental company with nearly $22.5 billion (close to R$115 billion) revenues in 2020 and others that have a global presence, such as Avis Budget Group (B+/Negative/--). Movida also generates a lower share of revenue from the more stable GTF segment than its domestic competitor, Companhia de Locação das Américas (brAAA/Stable/--).