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European Commission President Ursula von der Leyen, left, speaks with German Chancellor Angela Merkel during a round table meeting at an EU summit in Brussels, Thursday, Feb. 20, 2020. After almost two years of sparring the EU will be discussing the bloc´s budget, to work out Europe´s spending plans for the next seven years. (20/02/2020)
French President Emmanuel Macron arrives for a round table meeting at an EU summit in Brussels, Thursday, Feb. 20, 2020. After almost two years of sparring the EU will be discussing the bloc´s budget, to work out Europe´s spending plans for the next seven years. (20/02/2020)
Mexico´s President Andres Manuel Lopez Obrador waves during an event marking Army Day at the Zocalo, flanked by Defense Secretary Luis Cresencio Sandoval, from left, first lady Beatriz Gutierrez Muller and Navy Secretary Vidal Francisco Soberon, in Mexico City, Wednesday, Feb. 19, 2020. (19/02/2020)
President Donald Trump speaks at a campaign rally Wednesday, Feb. 19, 2020 in Phoenix. (19/02/2020)
Traders Timothy Nick, left, and Peter Tuchman work on the floor of the New York Stock Exchange, Tuesday, Feb. 18, 2020. Stocks are opening lower on Wall Street after Apple said it would fail to meet its revenue forecast for the current quarter due to the impact of the virus outbreak in China. (18/02/2020)
President Donald Trump gives thumbs up after speaking with the media as he boards Air Force One as he departs Tuesday, Feb. 18, 2020, at Andrews Air Force Base, Md. (18/02/2020)
US Secretary of State Mike Pompeo speaks at a business leaders reception at the Museu de Moeda in Luanda, Angola, Monday Feb. 17, 2020. Pompeo started his tour of Africa in Senegal, the first U.S. Cabinet official to visit in more than 18 months. He left Senegal Sunday to arrive in Angola and will then travel on to Ethiopia as the Trump administration tries to counter the growing interest of China, Russia and other global powers in Africa and its booming young population of more than 1.2 billion. (17/02/2020)
Russian President Vladimir Putin listens during a meeting in the Kremlin in Moscow, Russia, Monday, Feb. 17, 2020. (17/02/2020)
U.S. Secretary of State Mike Pompeo, left, and German Foreign Minister Heiko Maas attend a bilateral meeting during the annual Munich Security Conference, on Friday Feb. 14, 2020. (14/02/20)
German Chancellor Angela Merkel, left, and the Prime Minister of Sudan, Abdalla Hamdok, right, shake hands after a joint statement as part of a meeting in Berlin, Germany, Friday, Feb. 14, 2020. (14/02/20)
Russian President Vladimir Putin speaks as he meets with members of a working group created to discuss constitutional amendments in Moscow, Russia, Thursday, Feb. 13, 2020. (13/02/20)
German Chancellor Angela Merkel, left, and the Prime Minister of Armenia, Nikol Pashinyan, right, shake hands after a joint statement prior to a meeting at the Chancellery in Berlin, Germany, Thursday, Feb. 13, 2020. (13/02/20)
Austrian Chancellor Sebastian Kurz, right, welcomes Margaritis Schinas, Vice-President of the EU-Commission and Commissioner for Promoting our European Way of Life, at the federal chancellery in Vienna, Austria, Wednesday Feb. 12, 2020. (12/02/20)
Vice President Mike Pence speaks at a campaign rally, Monday, Feb. 10, 2020, in Portsmouth, N.H. (11/02/20)
French President Emmanuel Macron speaks at the national conference on Handicap at the Elysee Palace in Paris, France, Feb. 11, 2020. (11/02/20)
President Donald Trump speaks during a ´White House Business Session with our Nation´s Governors,´ in the State Dinning Room of the White House, Monday, Feb.10, 2020, in Washington. (10/02/20)
Britain´s Foreign Secretary Dominic Raab, left, and Japan´s Foreign Minister Toshimitsu Motegi look at each other while speaking their remarks in Tokyo, Saturday, Feb. 8, 2020. (10/02/20)
Trader Michael Capolino works on the floor of the New York Stock Exchange, Thursday, Feb. 6, 2020.U.S. stocks rose in midday trading Thursday as investors continued focusing on the latest round of corporate earnings and China cut tariffs on key imports as part of a trade war truce. (06/02/2020)
President Donald Trump speaks in the East Room of the White House, Thursday, Feb. 6, 2020, in Washington. (06/02/2020)
Trader Andrew Silverman, right, works on the floor of the New York Stock Exchange, Wednesday, Feb. 5, 2020. Stocks are opening broadly higher on Wall Street, putting the market on track for a third straight day of solid gains. (05/02/2020)
British Prime Minister Boris Johnson waves at the media as he leaves 10 Downing Street in London, to attend the weekly Prime Minister´s Questions at the Houses of Parliament, in London, Wednesday, Feb. 5, 2020. (05/02/2020)
Images Source: AP bootstrap carousel

Actinver's Favorites

  • Femsa is the leader company in Latin America among the convenience stores industry, also, it operates pharmacy stores, gas stations and KOF, the largest TCCC bottling company in the world. We like: i) Defensive portfolio, wide and resilient services/products offer. ii) Presence in Brazil, through KOF and the Raizen convenience stores JV. iii) Growth expectations, we project an 8% CAGR 2018-2024 for both sales and EBITDA. iv) Profitability estimates, EBITDA margin, expanding from 14.6% to 18.6% in the next 5 years (2019-2023). v) Finally, we foresee the recent entrance to the Brazilian market through the convenience stores business as one of the company’s main drivers.

  • FUNO is the largest and most diversified Mx REIT offering an appealing TSR. We like its: i) strong positioning in Mexico’s core RE markets through its 559 properties; ii) “bullet-proof” balance sheet, with a prudent debt profile (34% LTA), LT debt maturities (82% at 49+ months), naturally hedged 33% US$-debt, and 69% at a fixed rate; iii) high growth potential in NAVPS2 (+10%E CAGR ‘18-’22); iv) sound div. yield at 8%+; v) improved corporate governance with anti-dilutive mechanisms; vi) defensiveness on competitive rents, 4.3-year avg. lease expiry & solid tenant base; vii) organic NOI3 growth potential (+10% CAGR ‘18- ’21); and viii) attractive valuation.

  • GFNorte is a well-diversified financial holding. It is the second largest financial institution in Mexico, with over 1,100 branches and 8,500 ATMs. The Group's strategy focuses in organic growth & operating efficiencies through the exploitation of its sound 25 million-customer base (e.g., cross-selling). GFNORTE's share is trading at historically low P/E multiples (1 st. dev. below historical avg.). At current price levels, the market is not only overlooking the company's higher profitability levels achieved (ROE of 20%+), but also its unique capabilitites to continue benefiting through the management of its large network and client base.

  • It is one of the most diversified Mexican business groups, with a very low exposure to the Mexican economy and significant long-term growth prospects in the area of irrigation and water systems. Despite this, Orbia is trading at a 34% discount with respect to the weighted average of its peers in terms of the 2019 EV / EBITDA multiple. We consider that the stock has been punished in the markets for uncertainty regarding the long-term business plan of the company, which should be resolved in the coming months with the disclosure of this plan.

  • Leading telecom provider in Latin America and one of the largest in the world. Wide geographic diversification with ~70% of consolidated EBITDA coming from outside Mexico. We estimate a 7.2% CAGR for postpaid subscribers and 2.4% for fixed subs for the following five years, where growth will be boosted by increasing data consumption, especially in mobile services. Moreover, cost-cutting initiatives should drive margins up to levels around ~33% vs. current ~30%. Current valuation stands at 5.2x EV/EBITDA; well below international peers (6.4x). Lastly, the possibility of a Pay TV license to be granted could be a short-term catalyst for the share price.

  • The small & medium enterprises (SME) is our preferred niche to invest in Mexico given its highest growth potential & profitability. BBajio is the leading financial institution in this segment, with the highest organic growth track-record in the country. It has a healthy loan portfolio with the lowest funding cost. It has an experienced management team, with more than 30 years of experience, working together since BBajio's foundation. We find an appealing investment opportunity on BBAJIO's share, trading at discount vs. its Mexican peers, at 6.7x P/E 2020E.

  • The third-largest self-service retailer in Mexico and poised to become the second-largest chain just behind Walmart in the following 5 years. We like CHEDRAUI’s: i) appealing valuation, the share price trades at 50% of its value (USD) since the IPO, while it has almost tripled its EBITDA and has doubled its number of stores under operation; ii) discount in terms of sales floor area, its current EV per m2 (USD$1,722) trades at an 11% discount vs. the current cost per m2 (USD$1,932); iii) EBITDA margin expansion potential in the U.S up to 7.0%, through strong costs and expenses efficiencies, 3.9% in 2018, 5.6% in the first 9 months of 2019, and 6.1% in 2020E; iv) revaluation of its EV/EBITDA from 5.7x (current) to 6.5x (2020E); v) sustained growth prospects through new store openings & a diversified store portfolio in terms of price & size, CAGRs (2020-2025E) of 7% for both revenues & EBITDA.

  • GCC has a unique business model focused on profitability. We like GCC because: i) its exposure to the center of the U.S., where there are no direct competitors; ii) GCC’s vertical integration with a wide distribution network; iii) business strategy focused on reducing expenses (use of AF continue increasing); iv) solid financial position, with low leverage and free cash flow generation, where EBITDA conversion to FCF is close to 70%; and v) a solid management team, with more than 28 years of average experience in the cement industry.

  • IEnova, a subsidiary of Sempra Enegy (U.S. company), is a leading company in the energy industry, focused on the development, construction and operation of energy infrastructure in Mexico. Its assets are distributed in 2 segments: gas and electricity. In the gas business, IEnova owns and operates distribution systems (123K customers), transport (+2,100 km of pipelines) and storage of natural gas, LP gas and ethane (~ 11 terminals). In the electricity segment, the company owns power generation projects (combined cycle, wind and solar) with a total of +1,500 MW. We are confident on the name, and its upside potential due to: i) its solid positioning to capture long-term growth in the local energy industry; ii) its relationship with local and international, public and private strategic partners (e.g., TC Energy, CFE, InterGen), for the development of new projects; iii) the defensive nature of the business, given its long-term dollarized contracts (10+ years); and iv) high dividend.

  • The largest rail operator in Mexico provides exposure to macro trends such as intermodal transportation, cross-border and light-fuel private sector growth. The company will continue to invest heavily, in order to reach efficiency to levels close to peers in the U.S., which will improve margins significantly. Exposure to macro risks is relatively modest, bearing in mind its product portfolio is centered on agricultural, industrial and commodity volumes. On the other hand, the company will be benefited by the USMCA ratification. Furthermore, the stock is trading at a 33% EV/EBITDA 2019 discount relative to its peers, and we expect it could grow EBITDA at an 8% pace for the following two years.

  • FMTY is the first 100% internally-mgd. Mx REIT, with the top Corporate Governance standards & fully aligned structure. It is a diversified Fibra, focused preponderantly in the office RE segment (50% of revenue). We like FMTY’s: i) proven & consistent growth model, based mostly on stabilized RE assets. Its portfolio’s value increased almost fivefold since IPO; ii) sustained DPS growth (9% CAGR 1Q15-1Q19); iii) efficient structure, delivering NOI & EBITDA margins of 90% and 81%, respectively; iv) anti-dilutive mechanisms; v) healthy leverage with a ~30% LTA (post-follow-on figure); vi) high growth potential through a tangible pipeline of acquisitions worth ~US$500+ M; vii) attractive div. yield at 9%+; viii) exposure to the U.S. dollar (70% of revenue); ix) long-term remaining weighted avg. lease term at 5.2 years; x) and competitive (below-market) rental rates.

  • Uniquely positioned to benefit from copper’s strong fundamentals in the long-term. It has the lowest costs per pound of copper produced. We estimate the outstanding portfolio of mines, as well as the attractive project pipeline could increase copper production at a 4.3% CAGR for the following five years. Additionally, the company is the largest rail operator in Mexico and Florida, where solid organic growth is expected for the following years. The current ~38% discount at which it trades vs. the fair value of its subsidiaries should correct back to levels close to 25-30% in the following periods. Furthermore, the start of construction of the attractive Tía María copper project could drive the stock.

  • A lodging C-Corp with a unique, profitable & scalable fully-integrated business model. It develops (low cost; 3rd parties), acquires, manages (efficient, standardized ops.), and franchises (own brands) hotels in the economy & budget limited-service segment, targeting the price/value-conscious business travelers (defensive). We like HCITY’s i) solid growth track record (+15% rooms CAGR since ‘13); ii) profitability (36% stabilized EBITDA margin; 12%-14% ROIC; 30% occ. breakeven); iii) diversification across Mexico’s most dynamic markets; iv) experienced & institutional mgmt. team; v) corporate governance; vi) growth prospects (+17% EBITDA CAGR ‘18-’22E); vii) operational & financial flexibility; viii) potential evolution towards an asset light business model through its Fibra STAY (enhanced value; sustainable asset recycling mechanism; liquidity); and ix) LT economies of scale at its OpCo.

  • Terrafina is the largest pure play industrial Mx Fibra. Through accretive M&As, it has been able to expand its RE portfolio by 3.6 times since IPO (March 2013), reaching 289 properties with 41.8 M SQF. This proves the sound execution of its premier external advisor PGIM Real Estate. Different from its local industrial peers, it has an internal management subsidiary, with which it delivers the most profitable operations in the CRE sector (83% EBITDA margin). We also like its: i) top-notch Corporate Governance standards; ii) commitment to consider the issuance of new shares only if the share price trades at a premium to NAV; iii) transparency; and iv) attractive dividend yield.

  • A diversified Mx REIT (NOI 82% industrial; 18% retail) operating under a quality, institutional platform, preponderantly in the North region. It has a scalable internal property administration platform (MPA), supervised by MMREM (REIT’s external advisor, a MIRA’s subsidiary), with which it has reached high levels of profitability (83% EBITDA margin). Its portfolio provides highly stable & dollarized rents (~78%). The trust has a proven effective capital deployment strategy, focused in expansions & development projects (YTC at 12%). With the completion of its 2H19’s US$500 M refinancing plan, it significantly improved its debt profile, extending its maturity term to 6+ years. FIBRAMQ delivers the highest AFFO yield.

  • Arca Continental is the second largest Coca-Cola bottler in Latin America and the only one with a presence in the United States (South region). We like: i) ~45% of sales are dollarized. ii) growth expectations, EBITDA grows profitably, we estimate a CAGR 2018-2024 of 5% and 6% for sales and EBITDA, respectively. iii) further efficiencies ahead. We forecast and EBITDA margin expansion from 17.6% to 18.4% in the next 5 years (2019-2023); and iv) geographical diversification. It is important to note that AC operates in the northern region of Mexico, which has greater purchasing power, and we do not rule out territorial expansion in the United States.

  • While we acknowledge that the company will see a decline in earnings this year, the company is already trading at historically low multiple levels even considering this. Furthermore, the record-high discount vs. its sum-of-parts valuation is likely to attract investors interested in “deep-value” opportunities. Additionally, the conglomerate’s low exposure to the Mexican economy (less than 30% of revenues) makes it a defensive play against low economic growth in the country. It is also important to note that non-strategic asset sales (Axtel’s data centers/mass market business and Alpek’s power plants) will result in a meager 2.2% impact on EBITDA, while decreasing EV by 10%, improving the company’s trailing valuation in the process.

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