BRF S.A.: A Catalyst-Driven Revaluation in the Global Protein Market

The first quarter of 2025 has cemented BRF S.A. (BRFS) as a transformative force in the global protein industry, with its record financial performance and bold strategic moves positioning it for sustained margin expansion and market dominance. Combining operational excellence, disciplined capital allocation, and accretive international expansions, BRF is primed for a valuation re-rating that investors should act on before the market catches up.

Operational Efficiency: The Foundation of Margin Expansion

BRF’s Q1 results exemplify how operational rigor can unlock extraordinary value. With Adjusted EBITDA soaring to R$2.8 billion—a 30% year-over-year increase—the company has achieved its highest quarterly EBITDA in history. This growth stems from the BRF+ program, which delivered R$305 million in savings through process optimization and cost discipline. The net leverage ratio plummeted to a historic 0.54x, down 63% from 2024, while free cash flow surged to R$1.3 billion, up 52% YoY. These metrics signal a financially agile company capable of outperforming peers in volatile markets.

Global Expansion: Capturing High-Growth Markets

BRF’s strategy extends beyond cost savings to aggressive, accretive expansions in Asia and the Middle East. Key moves include:
- China: Acquiring a processed food plant in Henan Province, enabling localization to compete in the world’s largest poultry market.
- Saudi Arabia: Securing a 26% stake in Addoha Poultry and planning a Jeddah-based plant focused on value-added products, capitalizing on the GCC’s growing demand for premium offerings.

These initiatives align with BRF’s 12 new export authorizations in Q1, expanding its reach into key regions. In Saudi Arabia alone, its Sadia brand commands 36.6% market share in the Halal segment—a testament to brand strength in high-margin markets.

Valuation: A Hidden Gem in a Premium Sector

Despite its robust fundamentals, BRF remains severely undervalued compared to global peers. As of May 2025:
- P/E Ratio: 10.22x, nearly halfof Mondelez (24.22x) and Kraft Heinz (12.55x).
- Forward P/E: A 4.81x, signaling investor underappreciation of its growth trajectory.

With free cash flow up 52% and no debt maturities before 2028, BRF has the flexibility to reinvest in growth while maintaining a fortress balance sheet. This contrasts sharply with peers burdened by high leverage or stagnant margins.

ESG Milestones: Building Long-Term Investor Confidence

BRF’s inclusion in the B3 Corporate Sustainability Index (ISE) and Carbon Efficient Index underscores its commitment to ESG leadership. Employee satisfaction rose to 89%, surpassing high-performance benchmarks, while its FIFO inventory levels hit record lows, reflecting supply chain efficiency. These metrics are critical for attracting ESG-conscious investors and mitigating regulatory risks in emerging markets.

Why Act Now?

The catalysts are clear:
1. Margin Expansion: BRF’s 17.7% EBITDA margin (up 1.9pp YoY) will widen further as scale advantages and premium product sales grow.
2. Geographic Diversification: Expansions in China and Saudi Arabia reduce reliance on volatile domestic markets.
3. Valuation Uptick: The 4.81x forward P/E leaves ample room for re-rating as earnings visibility improves.

Investors ignoring BRF’s transformation risk missing a multi-year growth story. With its financial health, strategic execution, and undervalued stock, BRF is a buy at current levels. The question isn’t whether the market will recognize its potential—it’s whether you’ll be early enough to capture the upside.

Call to Action: BRF’s combination of operational discipline, accretive global moves, and undervalued metrics makes it a must-own stock for 2025. Act now before the revaluation begins.