We value ALPA4 at R$11.00, based on a Discounted Cash Flow to Equity model, as we believe that it better captures the company’s long-term growth potential. We use a cost of equity (Ke) of 14.9%, which is the result of a 4.4% risk-free rate in dollars, 2.5% country risk, 5.5% equity risk premium, 1.1 beta, and a 2.0% inflation differential between Brazil and the US. Nominal growth (g) is set at 4.2%.

Risks to our target price: International operations are being continuously reviewed, and management may need to adjust the company's footprint in certain regions. We are also monitoring the (fluid) tariff discussions and how countries might respond to current tariffs imposed by the US (e.g., on Brazil and China). Since ALPA has industrial units located in Brazil and China that export to the US, the company is highly exposed to these risks.