PREVIEW-Gafisa reversed loss in Q4 on housing recovery

* Gafisa reverses loss on rising sales, launches

* High debt to slow pace of growth amid housing rebound

By Carolina Marcondes

SAO PAULO, Feb 8 (Reuters) - Gafisa (GFSA3.SA), Brazil's
second largest real estate developer, will likely report on
Monday that net income edged higher in the fourth quarter,
signaling that government efforts to spur the housing sector are
bearing fruit.

Sao Paulo-based Gafisa will post profit of 67 million reais
($35 million) in the three months ended on Dec. 31, 2009,
reversing a loss of 13 million in the year-earlier period,
according to the average estimate of four analysts in a Reuters
survey.

Gafisa is scheduled to report fourth-quarter and 2009
earnings after market hours.

President Luiz Inacio Lula da Silva's $20 billion plan to
spur the construction of about 1 million new low-income homes
breathed new life into shares of Gafisa and other real estate
companies, the analysts said.

Gafisa's stock surged 80 percent over the past 12 months as
record-low borrowing costs and Lula's plan -- known in Brazil as
"My House, My Life" -- stoked demand for housing.

Revenue probably rose an average 40 percent and new launches
62 percent in the period, as the renewed focus on low-income
housing helped reduce inventory and sales of more expensive
homes and upscale office projects bounced back, BES Securities
do Brasil analysts said in a report last week.

Accounting changes for the real estate industry implemented
by regulators that took effect last year likely distorted the
comparison with the fourth quarter of 2008, the analysts said.

Brazil's real estate industry, the biggest recipient of
investors' money during the initial public offering boom of
2006-2007, tumbled in the wake of the global credit crisis that
kicked off in September 2008, when wary consumers recoiled from
purchasing homes as credit dried up and joblessness spiked.

"The real estate sector in Brazil has shown remarkable
recovery after the crisis in 2008 and Gafisa has benefited from
this scenario," Andre Rocha, an analyst with Bradesco BBI, said
in a Feb. 3 report.

But the four analysts noted that the company faces a
challenging scenario in 2010, mainly because of its high
indebtedness and possible bottlenecks in the supply of building
materials and high land prices.

Gafisa's profit margins are underperforming relative to some
peers as it struggled to reduce its 2.8 billion reais of debt.
The company had 1.1 billion reais in cash holdings at the end of
the third quarter.

In the three months ended on Sept. 30, total debt was the
equivalent of 74 percent of the company's net worth. The ratio
rose from about 66 percent in the second quarter of last year.

Gafisa likely will report average earnings before interest,
tax, depreciation and amortization (EBITDA) of 158 million
reais, more than four times the 34 million reais of the year-ago
period.

The following table shows the analysts' average estimates
for the company:

4Q 2009 4Q 2008 PCT CHANGE

(ESTIMATE) (RESULT) (%) (MLN
Reais)
================================================================
Launches 985 mln 607 mln 62 pct
Net revenue 871 mln 624 mln 40 pct
EBITDA 158 mln 34 mln 369 pct
EBITDA margin 17.6 pct 5.4 pct --
Net income 67 mln -13 mln --
================================================================

($1=1.891 reais)

(Writing and additional reporting by Guillermo Parra-Bernal)