Executive Summary / Key Takeaways

• Dual Growth Engine: BrasilAgro ($LND) thrives on a unique dual strategy, combining the acquisition, development, and sale of agricultural real estate with robust operational results from diversified crop production, consistently generating value for shareholders.
• Technological Edge & Efficiency: Strategic investments in connectivity, advanced ERP systems, a proprietary seed production plant, and expanded irrigation projects are enhancing operational efficiency, reducing costs, and boosting yields across its diverse portfolio.
• Resilient Financials Amidst Volatility: Despite challenging weather and commodity price fluctuations, the company reported a 5% increase in Net Revenue to R$1.2 billion in 2025, supported by strong agricultural product sales and strategic hedging, maintaining a healthy financial position with comfortable leverage.
• Optimistic Outlook with Strategic Hedging: Management projects a promising 2025/26 crop year with stable weather and productivity gains, aiming for 30-35% EBITDA margins and aggressive hedging strategies for key crops like soybean, while continuing its disciplined approach to capital allocation and dividend distribution.
• Competitive Differentiation: LND's extensive land holdings, vertical integration, and geographic diversification provide a competitive moat against rivals, enabling greater operational stability and resilience in a volatile agricultural market.

The Fertile Ground of BrasilAgro: A Dual Strategy for Sustainable Growth

BrasilAgro - Companhia Brasileira de Propriedades Agrícolas ($LND) stands as a distinctive player in the agribusiness sector, built upon a foundational dual strategy: the astute acquisition, development, and monetization of rural properties, coupled with high-efficiency agricultural production. Incorporated in 2005, LND pioneered its path by becoming the first agricultural production company to list on both B3's Novo Mercado and the NYSE, signaling an early commitment to robust governance and capital market integration. This historical trajectory, marked by strategic land acquisitions like Fazenda Alto Taquari in 2006 and Fazenda Preferência in 2008, has shaped its current position as a company adept at unlocking value from land transformation.

The broader agricultural industry is characterized by inherent seasonality, commodity price volatility, and increasing global demand for food and biofuels. LND navigates this landscape by leveraging its diversified portfolio across various crops—soybean, corn, sugarcane, cotton, and beans—and geographies, including Brazil, Paraguay, and Bolivia. This diversification acts as a crucial buffer against localized climate impacts and market fluctuations, a strategic imperative in an industry susceptible to environmental and economic shifts.

Technological Prowess: Cultivating a Competitive Edge

A cornerstone of BrasilAgro's strategy is its relentless pursuit of technological differentiation and innovation, which underpins its operational excellence and competitive positioning. The company is actively implementing advanced solutions to enhance productivity and reduce costs.

LND's core technological initiatives include widespread connectivity projects across its units, aiming for 100% internet coverage on farms. This digital infrastructure is critical for the Agricultural Operations Center (COA), a new milestone designed to accelerate digital transformation and improve operational discipline. The CEO, André Guillaumon, highlighted the transformative potential of 5G in Brazilian agriculture, noting that expanding 5G coverage to 50% of agricultural areas could add R$50-60 billion to the GDP, with estimates reaching R$110 billion if coverage extends to 80% of production areas. This underscores LND's commitment to leveraging advanced communication for real-time monitoring and data-driven decision-making.

Furthermore, LND is investing in a proprietary seed production plant, primarily for its own soybean seed consumption. This initiative addresses the escalating cost of seeds, which has surged from R$170-R$190 per hectare five years ago to R$750-R$800 today, with R$600 of this increase attributed to biotechnology. By producing its own seeds, LND aims for significant cost reduction and better standardization, enhancing control over a critical input. The company plans to scale its internal seed production from 15-20% to 60-70% of its needs, a tangible benefit that directly impacts its cost structure.

Irrigation projects are another key differentiator, particularly in Bahia for grains and cotton, and for sugarcane in regions like Maringá. These investments are designed to increase yields and provide greater stability against adverse weather conditions. For instance, irrigated areas have demonstrated yields of 217 bags, with mature land potentially reaching 350-400 bags, significantly boosting productivity and profitability. The company strategically leases irrigation equipment, comparing costs with subsidized credit lines, and has found leasing advantageous due to external capital access. This focus on controlled water management mitigates climate risks and ensures consistent output.

These technological advancements collectively contribute to LND's competitive moat by driving efficiency, reducing reliance on external suppliers for critical inputs, and stabilizing yields. This allows LND to maintain robust margins and operational resilience, differentiating it from competitors who may face higher input costs or greater exposure to weather-induced volatility.

Business Model and Strategic Initiatives: Balancing Land and Operations

BrasilAgro's business model is a testament to its strategic agility. The company's real estate segment focuses on acquiring underdeveloped rural properties, transforming them into highly productive agricultural assets through infrastructure and technology investments, and then monetizing them for capital gains. This strategy has consistently delivered, with farmland sales totaling approximately R$1.9 billion over the five years leading up to 2025, averaging R$380.4 million annually. The recent sale of Fazenda Preferência for R$141.4 million, yielding an estimated IRR of 9.3% per year, exemplifies this value creation, particularly given the farm's initial limited potential and low-liquidity location.

Complementing this, the agricultural products segment cultivates a diverse array of crops and engages in cattle raising. The company strategically balances owned and leased land, aiming for a 40-50% split in both categories. This mix provides flexibility, reduces volatility in operating cash flow, and allows for expansion without heavy capital expenditure. Recent acquisitions and leases, such as Fazenda Panamby and São Domingos in Mato Grosso, and a long-term lease in Comodoro, have added over 25,000 hectares to LND's operational footprint, ensuring continued growth in planted area despite property sales. The shift in Paraguay's cattle raising strategy from male fattening to a full-cycle breeding operation further demonstrates LND's adaptive approach to optimizing asset utilization.

Financial Performance: Resilience in a Dynamic Market

BrasilAgro concluded the 2024/25 crop year with a Net Revenue of R$1.2 billion, representing a 5% increase over the previous year. This growth was primarily fueled by R$877.4 million from agricultural products (up 14% from 2024) and R$241.3 million from farmland sales. Despite a 61% decrease in farmland sales revenue year-over-year, the consistency of the real estate strategy is evident in the five-year average. Net Income for the period stood at R$138.0 million, with Adjusted EBITDA reaching R$267.3 million.

Operationally, 2024/25 presented challenges due to adverse weather and crop management complexities, leading to grain and cotton production falling 9% below initial estimates. However, LND's diversification strategy proved effective, with strong margins in sugarcane and gains in cattle raising, coupled with robust commercial and hedging strategies, mitigating the overall impact on profitability. For the full year 2025, Adjusted EBITDA was positive at R$87.3 million, driven by improved margins across most crops, notably soybeans and sugarcane. Soybean gross margin increased by 9 percentage points to 17% in 2025, propelled by a 16% rise in sales volume and an 8% reduction in unit costs. Sugarcane's gross margin surged by 17 percentage points to 30%, largely due to an increase in the Total Recoverable Sugar (TRS) price from R$0.98 in 2024 to R$1.26 in 2025. Cattle raising also saw an 8 percentage point increase in gross margin to 7%, benefiting from a 24% rise in unit price.

The company's liquidity remains robust, with a comfortable debt profile. The average debt balance increased from R$662.1 million to R$790.2 million, driven by strategic working capital growth to hold soybean inventory for better prices. The average cost of debt is competitive at 91.22% of the CDI rate. As of June 30, 2025, the property portfolio's market value, independently appraised by Deloitte, reached R$3.5 billion, reflecting an 18% CAGR over the past five years. This strong asset base, combined with R$450 million in receivables from farm sales, positions LND with low leverage and healthy financial indicators.

Competitive Landscape and Strategic Positioning

BrasilAgro operates in a competitive landscape alongside major players like SLC Agrícola (SLCE3), Agrogalaxy Participações S.A. (AGXY3), Bunge Limited (BG), and Archer-Daniels-Midland Company (ADM). LND's geographic diversification across Brazil, Paraguay, and Bolivia provides a qualitative advantage, spreading risk and offering resilience against localized environmental challenges. While SLC Agrícola may exhibit more streamlined operational execution and stronger cash flow, LND's integrated approach to real estate and agriculture, including leasing and brokerage services, offers a unique value proposition.

Compared to Agrogalaxy, LND's direct ownership and management of large-scale rural properties provide greater control over production costs, contrasting with Agrogalaxy's more supplier-dependent model. Against global giants like Bunge and ADM, LND's operations are more regionally focused, which can translate to greater efficiency in localized land management. However, Bunge and ADM benefit from global scale, broader market access, and superior technological innovation in processing. LND's competitive advantages lie in its extensive land holdings, vertical integration, and sustainable land development practices, which contribute to operational stability and potentially superior margins in property-related revenues. Barriers to entry in the industry, such as high capital requirements and regulatory hurdles for land acquisition, further solidify LND's defensive position.

Outlook and Guidance: Seeding Future Prosperity

Management projects a promising scenario for the 2025/26 crop year, anticipating more stable weather conditions and significant productivity gains. Despite recent property sales, the company expects to maintain its total planted area through new lease agreements, such as the 3,000 arable hectares in Comodoro, Mato Grosso, and the entry into production of newly developed areas. This strategic expansion, coupled with consistent investments in technology and stronger operational discipline, is expected to drive superior results. The company projects a total sugarcane output of 1.9 million metric tons, with a TCH of 71.53 for the 2025 crop year.

LND aims for aggressive hedging strategies, targeting 80-85% of soybean sales by August, driven by expectations of dropping commodity prices and a desire to shorten payment terms. Management anticipates a recovery in sugarcane production, supported by increased irrigation investments and favorable weather. While fertilizer costs are expected to drop after the Northern Hemisphere winter, the company's focus on developing new land means fertilizer dosage will not significantly decrease. LND is targeting 30-35% EBITDA margins, which would trigger more aggressive buying and selling activities. The company's dividend policy remains aggressive, with a target dividend yield of 5-5.3%, reflecting its commitment to returning value to shareholders, particularly from strong farm sale results.

Risks and Challenges

Despite the optimistic outlook, BrasilAgro faces inherent risks. Adverse weather conditions, as experienced in 2024/25 with droughts in Bahia and excessive rainfall in Mato Grosso, remain a significant operational challenge, impacting crop yields and production estimates. Commodity price volatility, influenced by global supply-demand dynamics and geopolitical events, directly affects revenues and profitability. Logistics bottlenecks and rising input costs—including fertilizers, agrochemicals, and freight—can compress margins. The company's reliance on derivative transactions to hedge against commodity and currency fluctuations introduces its own set of risks, as evidenced by the negative Adjusted EBITDA in 4Q25 due to derivative losses. Furthermore, potential changes in taxation, such as dividend taxation, could impact shareholder returns.

Conclusion

BrasilAgro ($LND) presents a compelling investment thesis rooted in its proven dual strategy of agricultural real estate development and diversified crop production. The company's history of value creation through land transformation, coupled with its strategic investments in cutting-edge technology and operational discipline, positions it for continued growth and resilience. Despite the inherent volatility of the agribusiness sector and specific operational challenges, LND's diversified portfolio, effective hedging strategies, and robust financial health underpin its ability to generate consistent returns. The company's commitment to enhancing efficiency, expanding productive areas through strategic leases and development, and its transparent approach to shareholder returns, including a strong dividend policy, reinforce its long-term appeal. As LND continues to leverage its technological advantages and adapt to evolving market dynamics, it is well-equipped to cultivate sustained value for its discerning investor base.