JBS Posts World Best Meat Rally With Scandal in Rear-View Mirror

(Bloomberg) -- The only major meat company to beat JBS SA in the stock market this week is owned by the Brazilian giant.

The world’s largest meat producer and its Pilgrim’s Pride Corp. unit both gained about 9 percent in the past five days, outperforming peers. JBS shares are at three-year highs and its bond spreads are the tightest versus rival Tyson Foods Inc. since March 2017 as demand prospects brighten and the company moves past a 2017 corruption scandal, spurring renewed optimism it will finally proceed with an initial public offering in New York.

Sao Paulo-based JBS has beef, pork and chicken operations spanning North America, Europe and Australia. Its market value has climbed $1.8 billion since quarterly results in November topped estimates.

Investors are betting JBS will continue lowering debt in the coming quarters amid buoyant meat demand in the U.S. and rising consumption in Brazil, Betina Roxo, an analyst at Sao Paulo-based XP Investimentos, said by telephone.

The company has faced hurdles on plans for an IPO that emerged in May 2016. Wesley and Joesley Batista, the brothers who control JBS, confessed to bribery in 2017, sending the shares and bonds plummeting, triggering asset sales and debt refinancing.

Optimism this week on a possible U.S.-China trade deal and mounting concern that a swine disease outbreak in Asia may spread has signaled increasing export demand for U.S. and Brazilian meat, Roxo said.

Even after the rally, JBS shares are still the second cheapest among peers, fetching 8.4 times estimated earnings compared with a ratio of 10 for Tyson.

To contact the reporter on this story: Gerson Freitas Jr. in São Paulo at gfreitasjr@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Patrick McKiernan

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