Mexico Investing

By pjain      Published July 8, 2020, 8:36 p.m. in blog Invest   

Mexico Investing Overview

  • High potential - especially as US 2019 trade war with China intensifies.
  • By 2050, Mexico could become the world's fifth or seventh largest economy.

  • Mexico has absolutely everything from big state natural resources big population and a lot of educated one

Mexican StocksADRs on US Exchanges

EWW

IBA R7 c35 M=$1.8b y=3.2% RoI=24%, RoA=9% DE=0 gm=17% n=8% 12xf

KOF, c43 M=$2.3b y=4.6% roi=10% de=0.8 == 5yr$6%e2.5%

FMX brewer c60.5 $21b y=2.5% roi=8.3% de=1x - DEBT IS HIGH!

CX ?x c2.75 M=$4b y=3.6% roi=4% de=1.2x - infrastructure spending benefit ?%mktShare US?

Do Not consider

Xx TV, $3b - DE=2.6
Xx AMX cell  $42b - PHE - DE 5.5x - Slim pulled all his money many times over!
Xx BSMX bank $5b - risky as parent spanish bank, Info is not clear - opaque
X OMAB $1.6b Airlines
X ASR - airports $3.3b
X PAC - airports, $4b
  • Too small (M<1b) - VIST, BWMX, VLRS,SIM

Overall Key Factors, Trends

NAFTA

The Mexican economy is strongly linked to those of its North American Free Trade Agreement (NAFTA) partners, especially the United States.

USMC agreement

Going from fear of Trump pushing Mexico to USMC. Now rules involving trade and cross-border business ventures should become clearer. This reduced uncertainty should help Mexican stocks. This agreement so far centers on the auto industry - fabrication wages!

OECD

Mexico was the first Latin American member of the Organisation for Economic Co-operation and Development (OECD), joining in 1994. It is a member of the World Trade Organization, the G8+5, the G20, the Uniting for Consensus and the Pacific Alliance.

Screening and Watch

EWW MXF MXE UMX WMMVY GMK IBA KOF FMX AMX TV MXT CX SIM OMAB PAC ASR VLRS GTMAY BSMX RC MXE OPES OPESU

ETFs

  • Many Mexican stocks trade only on the Bolsa Mexicana de Valores, more commonly called the Mexican Bolsa north of the border.

EWW R7 ETF AUM=1.4b 0.48% -1%-5yrRet - c32 \ -30% ytd like most of Mexico stocks

  • iShares MSCI Mexico Capped
  • 60# Cos - TOPHEAVY - top five holdings are 40% of the fund's total positions.
  • 25% Consumer Staples
  • 50% Financials, materials, and telecom stocks make up nearly half of the fund,
  • 25% industrials, consumer discretionary, and real estate companies bulk of the remainder.

MXF Xx CEF aum=0.3b 1.69% 5yrROI=1.4%

  • Mexico Fund MXF Fund ETF

  • June 8, 2020 > temporarily suspend the Fund´s Managed Distribution Plan

  • Closed ends have only a fixed number of shares outstanding. That creates substantial discounts or premiums between the trading price of the shares and their net asset value.The fund currently trades at a 12% discount to net asset value, but its hefty expense ratio is typical of closed-end funds, especially internationally.

  • Has most of the same exposure as the main Mexican stock market benchmark.

  • 70% Consumer goods, industrials, basic materials, and financials
  • Consumer services and telecom stocks representing most of the rest of the remaining holdings.

MXE Xx AUM=0.09b 1.9% 5yrRet=6%

Mexico Equity and Income Fund MXE Fund ETF

UMX

ProShares Ultra Mexico Capped UMX Fund ETF

Consumer Staples

Kimberly Clark

  • Kimberly-Clark de México, S.A.B. de C.V., a subsidiary of American corporation Kimberly-Clark, engages in the manufacture and commercialization of hygiene and health care products. Founded in 1931, the company’s products include diapers and childcare products, feminine pads, incontinence care products, bath tissue, napkins, facial tissue, hand and kitchen towels, wet wipes and health care products.
  • Website: kimberly-clark.com.mx – Market Cap.: MX$ 120.6 Billion – Stock Symbol: KIMBERA

Retail and Restaurants

Liverpool R6 Retail

  • 2018 $7b, NI=0.6b, Assets 9b, M=8.5b

  • El Puerto de Liverpool is primarily engaged in the retail sector and owns the largest chain of department stores in Mexico. The company has two divisions commercial and real estate. The commercial wing is responsible for selling and promoting products in its department and duty-free stores. The real estate arm builds, operates and leases commercial space. The companies market value is $15.9.Billion.

WMMVY R6

Wal-Mart de Mexico Consumer Discounter

  • Also known as Walmex, is the largest subsidiary of Walmart outside the United States. It operates thousands of hypermarkets, discount department stores, and grocery stores across Mexico, Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica.
  • Website: walmex.mx – Market Cap.: MX$ 984.7 B

Alsea

Alsea S.A., known as Alsea, is a multi-brand restaurant operator. Alsea fast-food, casual and cafeteria restaurant chains in Mexico, South America with brands including Starbucks, Burger King, Vips, Domino’s Pizza, Italianni’s, Chili’s, California Pizza Kitchen, P. F. Chang’s, and The Cheesecake Factory.

Website: alsea.net – Market Cap.: MX$ 33.2 Billion – Stock Symbol: ALSEA

Food

GMK

Food Gruma

Gruma, S.A.B. de C.V., is a multinational food manufacturing company. The world’s leading producer of corn flour and tortilla, Gruma also produces wheat flour, breads, and derivative products, rice and other staple foods. Present in more than 100 countries, Gruma’s brands include Mission Foods, Maseca, and Guerrero together with a range of local brands.

Website: gruma.com – Market Cap.: MX$ 74 Billion – Stock Symbol: GRUMAB

IBA c36 ytd-30% M=1.8b (28-57) 13xF

  • Maintains a AAA credit rating within Mexico, making it stand out among Mexican stocks.
  • Positioned to serve DIRECT to wholesale, retail and supermarkets
  • Can benefit from farm exports from Mexico - 2% of US in farms and many very old/retiring, while 13% in Mexico
Year EPS% EPS PEf
2018 % 13x
5yrf 7%e
  • Food - Industrias Bachoco, S.A. de C.V. Based in Celaya, Mexico
  • largest producer of poultry in Mexico. It also produced feed and other meat products.
  • 2011 Owns large operation in US - OK Foods subsidiary, Arkansas
  • 2017 Albertville Foods bought - merged into OK foods
  • Owns and manages over 1,000 facilities, organized in approximately 10 production complexes and over 60 distribution centers in

Bimbo Food

  • 2018 $15b, NI=0.3b, Assets 13b, M=10b

A Mexican baking company that operates in 22 different countries. It has one of the largest distribution networks in Mexico and the U.S. that has allowed it to become the world's largest baking company. It completely dominates the Mexican market, and it's estimated that the company has a stake in roughly 90% of the baking industry. It has a market value of $13.5 B

  • Grupo Bimbo, S.A.B. de C.V., is a multinational bakery product manufacturing company. Operating in 32 countries throughout America, Europe, Asia, and Africa, the company’s brands include Bimbo, Marinela, Oroweat as well as a diverse range of local brands.
  • Website: grupobimbo.com – Market Cap.: MX$ 154 Billion – Stock Symbol: BIMBOA

Discretionary, Sin, Beverages

Arca Continental

  • 2018 $8b, NI=0.5b, Assets 12b, M=10b

Arca Continental bottles and distributes Coca-Cola products throughout Mexico, Central America and the United States. It’s the second largest Coca-Cola distributor in South America and the third largest in the world. It has a market value of $11.3 B

  • a beverage manufacturing and distribution company. Arca Continental produces soft drinks for brands owned or licensed by The Coca-Cola Company in Mexico, Ecuador, Peru, Northern Argentina, and the Southwestern United States.
  • Website: arcacontal.com – Market Cap.: MX$ 178 Billion – Stock Symbol: AC

Becle

Becle, S.A.B. de C.V., is a multinational spirits company and the world’s largest tequila company. Becle produces and distributes alcoholic and non-alcoholic beverages, ready to drink cocktails, and agricultural products in Mexico, the United States, and internationally. It operates through the Jose Cuervo family of brands, as well as Three Olives, Hangar 1, Stranahan’s, Bushmills and Boodles.

Website: cuervo.com.mx – Market Cap.: MX$ 103.8 Billion – Stock Symbol: CUERVO

FMX ytd-36% M=100b (55-99)

  • Beverages FEMSA or Fomento Economico Mexicano S.A.B. de C.V. hq Monterrey
  • multinational beverage and retail company
  • Largest beverage business in Mexico as well as in Latin America. A
  • FEMSA is also involved in retail through OXXO, the largest convenience store chain in Mexico with more than 14,000 stores.
  • FEMSA is also the second-largest shareholder of Heineken International.
  • Website: femsa.com – Market Cap.: MX$ 581.1 Billion – Stock Symbol: FEMSAUBD

  • Sep 2011, FEMSA became the largest independent bottler of Coca-Cola in the world.

  • 2018 Sales $25.7b NI $1.25b, Emps: 300,000
  • 2019 market value of $33.6 b

KOF R6 coke mexico -20% ytd (37-65)

  • Coca-Cola FEMSA, S.A.B. de C.V., known as Coca-Cola FEMSA or KOF, is a multinational beverage company, subsidiary of FEMSA, owning 48%, with 28% held by subsidiaries of The Coca-Cola Company. Coca-Cola FEMSA is the largest franchise Coca-Cola bottler in the world, operating in Latin America and the Philippines.
  • Website: coca-colafemsa.com – Market Cap.: MX$ 239.9 Billion – Stock Symbol: KOFL

Telecom, Media

AMX R6 ytd-20% M=55b (10-18)

  • Wireless VITAL for comm within and across border to "wealthy" overseas Mexicans
  • Focus on 4.5G rollout to 76 cities by 2018, then 5G in 2020
Year EPS% EPS PEf
2018 36% 93c 19x
2019 18%e
  • $52b in 2016
  • 194,000 employees
  • Global mobile telecommunications firm with 289 million subscribers, making it one of the largest in the world. Notable subsidiaries include Claro, Telmex, NET, Embratel, Telcel, TracFone Wireless, and Page Plus Cellular.

  • América Móvil operating in Mexico through its subsidiary Telcel which is the country’s largest mobile operator, with a market share above 70%. The company also operates in many countries of Latin America and the Caribbean through its Claro subsidiaries.

Website: americamovil.com – Market Cap.: MX$ 870.5 B

  • 2001 Telmex spun off América Móvil in 2001 - AMX once served as the wireless division of Teléfonos de México, known as Telmex, the one-time Mexican Govt owned telecom monopoly.
  • Grew Fast After the spin-off, AMX grew much faster
  • 2010 much so that it acquired Telmex.

  • Problem is controlled by Carlos Slim - subject to manipulation Spinoff and later acq of its parent was orchestrated by Mexican billionaire Carlos Slim. Mr. Slim made his fortune when Telmex first spun off from Mexican government control and he later orchestrated the takeover of Telmex by América Móvil.

  • other symbol AMOV Latin America’s largest carrier, Mexico City-based

TV R6 M16b c5.5 ytd-53% 30xf (14-22)

  • 5yrs+ of Falling profit growth
Year EPS% EPS PEf
2018 66% 30x
2019 3%
5yrf 27%

Grupo Televisa - Largest media company in the Spanish-speaking world - LatAm - Big US presence via its Spanish-language channels, Univision and Telemundo

Megacable

Megacable Holdings, S. A. B. de C.V., is a diversified telecommunications company. Through its subsidiaries, especially including Megacable Comunicaciones, it operates cable television, provides internet and phone service and is also engaged in advertising sales and other associated telecommunications services.

Website: megacable.com.mx – Market Cap.: MX$ 66.4 Billion – Stock Symbol: MEGACPO

Maxcom MXT

Telecom Wireless

Construction, Real Estate

Fibra Uno Real Estate

  • 2018 $1b NI0.9b Assets 12b M=$6b

ICA

Construction - Empresas ICA

DHOXQ

Homex Real Estate Development

Utilities

Comisión Federal de Electricidad hq Mexico City

  • 2018 Sales USD $28.5b, Profits $2.3b, 91,000 employees

IENova, SEMPRA subs

  • Infraestructura Energética Nova, S.A.B. de C.V., commonly known as IEnova, is a utility company operating in the gas and electricity segments in Mexico. A subsidiary of Sempra Energy, IEnova develops, builds and operates pipelines and infrastructures for natural gas and liquefied petroleum gas (LPG). It also manages a natural gas power plant and wind turbines.
  • Website: ienova.com.mx – Market Cap.: MX$ 111.9 Billion – Stock Symbol: IENOVA

Materials, Energy, Chemicals

Pemex - nationalized

  • 2016 $58b
  • 126,000 employees

  • Oil is nationalized - core backbone for state revenues

  • State-owned oil and gas entity controlling much of the Mexican market. The firm was created through the nationalization of all foreign oil companies in Mexico in 1938 and governs oil exploration, extraction, refining, and commercialization in the country.

SCCO R7 y3.5% c45'18 [21.6-58] 19xF - but 5yr PEf=27x

  • building cars depends heavily on the copper
  • Trade agreement boosts LOCAL use of copper in mexico
Year EPS% EPS PEf
2018 160%e 19xf
2019 14% est
5yrf 37%
  • Southern Copper Corp based in Phoenix, AZ USA - but its subsidiary
  • 2005 owned by Mexico City-based mining company Grupo Mexico - got controlling interest, now at 89%
  • All of the company’s largest mines are located in Mexico and Peru. However, it has begun to explore for more sources of copper in Chile
  • Other than copper, it also produces substantial quantities of molybdenum, zinc and silver.

CX -27%ytd M=4b (1.5-4.4)

  • Cemex Based near Monterrey, Mexico

  • Second-largest building materials company in the world - Cemex operates in over 50 countries

  • 50% Sales from Mexico and U.S. operations
  • Little stock rise in 10 years

  • 2008 peso devaluation forced the company to sell assets to refinance debt

  • High debt levels and losses plagued the company for years after that.
  • 2015 turned profitable and grown every year since - Debt has fallen since 2015
  • 2018 Sales 14.4b, NI 0.5b, Assets 28b, M=7.4b $11b debt, a heavy burden when the current market cap also stands at about $11 billion.
Year EPS% EPS PEf
2018 30% 14x
2019 13% 5yrf

GCC

Grupo Cementos de Chihuahua, S.A.B. de C.V., also known as GCC, produces, distributes and sells construction materials including gray Portland cement, ready-mix concrete, and aggregates. Founded in 1941, GCC has also expanded its operations beyond Mexico to the United States. - Website: gcc.com – Market Cap.: MX$ 33 Billion – Stock Symbol: GCC

Penoles

  • Industrias Peñoles is the second-largest mining company in Mexico. A subsidiary of Grupo BAL, Industrias Peñoles is the world leader in the production of silver, also involved in the production of gold, zinc, lead, copper, bismuth, and cadmium as well some chemical products.
  • Website: penoles.com.mx – Market Cap.: MX$ 84.4 Billion – Stock Symbol: PE&OLES

Mexichem

  • Mexichem, S. A. B. de C.V., is a chemical and petrochemical company. Mexichem notably produces plastic pipes and a range of products used in infrastructure, housing, telecommunications and water distribution in Mexico, the United States, Europe, Asia, Africa, the Middle East, and Latin America.
  • Website: mexichem.com – Market Cap.: MX$ 69.4 Billion – Stock Symbol: MEXCHEM

GrupoMexico Mining

  • 2019: $18.5 b

  • Largest mining company from Mexico.

  • Has operations in Mexico, Peru, the United States, Argentina, Chile, Ecuador, and Spain.
  • Website: gmexico.com – Market Cap.: MX$ 335.2 Billion – Stock Symbol: GMEXICOB

  • Third largest producer of copper in the globe. Grupo Mexico has a subsidiary mining company, ASARCO, LLC, which is located in Tucson, Arizona.

  • SEG:Rail via GMexico Transportes/Ferrocarril Mexicano - operates the largest rail fleet in Mexico.

SIM c5.6 -46%ytd M= ( )

Steel & Iron - Grupo Simec

Industrials, Infrastructure & Conglomerates

Pinfra

Promotora y Operadora de Infraestructura, S. A. B. de C.V., commonly known as Pinfra, is a company operating infrastructures. Pinfra is engaged in the construction, management, financing and promotion of highways, ports, railroads, airports, parking lots and wastewater treatment plants. It is also involved in networks of drinking water, sewage, garbage collection, and sweeping services.

Website: pinfra.com.mx – Market Cap.: MX$ 68 Billion – Stock Symbol: PINFRA

Grupo Electra

  • 2018 $5.4b, NI=0.8b, Assets 14b, M=12.7b

  • financial and retail company. It is a leader in specialized financial and commercial services in Latin America, also providing short-term non-banking loans in the United States.

Website: grupoelektra.com.mx – Market Cap.: MX$ 321.5 Billion – Stock Symbol: ELEKTRA

ALFA M=5.5b - Oil/Gas

  • 2018 Sales $19b, NI=0.7b, Assets 19b,
  • Based in Monterrey

  • Alfa S.A., also known as Alfa or Alfa Group, is a multinational conglomerate primarily involved in industrial businesses. Alfa is engaged in the extraction of oil and natural gas and in the production of petrochemicals, in the manufacturing of aluminum auto components, in the production of refrigerated foods and in the provision of IT and telecommunications services. Based in Mexico, Alfa is also operating in the United States and more than 20 countries across the Americas, Europe, and Asia.

  • Website: alfa.com.mx – Market Cap.: MX$ 80 Billion – Stock Symbol: ALFAA

Alpek S.A.B. de C.V., is a chemical manufacturing company. Part of the ALFA conglomerate, Alpek produces a range of plastics and chemical compounds employed in manufacturing in production plants located in the United States, Mexico, Brazil, Argentina, and Chile. Website: alpek.com – Market Cap.: MX$ 45.1 Billion – Stock Symbol: ALPEKA

Grupo Carso Conglomerates M=$10.5 B

  • 2018 $5b, NI=0.5b, Assets 7b, M=9b

It is a global business conglomerate engaged in the industrial, retail, infrastructure and construction sectors. The diversified nature of its interests mean the company is active in a lot of different fields including: energy, automotive, mining, department stores, civil construction and housing.

  • operates in industrial businesses with Grupo Condumex, retail with Grupo Sanborns, infrastructure and construction with Carso Infraestructura y Construcción, and energy with Carso Energy.
  • Website: carso.com.mx – Market Cap.: MX$ 118.2 Billion – Stock Symbol: GCARSO A1

  • Owns Carlos Slim who has an estimated net worth of $50 Billion.

Services

Airlines, Rails, Airports

OMAB c37 -40%ytd M=2b (20-67) - AIRPORTS

Transports/Airlines Grupo Aeroportuario del Centro Norte S.A.B. de C.V.

Grupo Aeroportuario Centro Norte, S.A.B. de C.V., known as OMA, is an airport operator. With 13 airports in central and northern Mexico, OMA serves approximately 15 million passengers annually. Website: oma.aero – Market Cap.: MX$ 43.3 Billion – Stock Symbol: OMAB

Grupo Aeroportuario del Pacífico, S.A.B. de C.V., known as GAP, is an airport operator. With 12 airports in western Mexico and 1 in Jamaica, GAP serves approximately 27 million passengers annually. Website: aeropuertosgap.com.mx – Market Cap.: MX$ 93.6 Billion – Stock Symbol: GAPB

PAC c69 ytd-40% M=4b (44-135)

Transports/Airlines Grupo Aeroportuario Del Pacifico, S.A. de C.V.

ASUR Airports

Grupo Aeroportuario del Sureste, S.A.B. de C.V., known as ASUR, is an airport operator. With 9 airports in southeastern Mexico, ASUR serves approximately 23 million passengers annually. Website: asur.com.mx – Market Cap.: MX$ 83.5 Billion – Stock Symbol: ASURB

ASR c110 ytd-41%

Transports/Airlines Grupo Aeroportuario ???

VLRS c5.2 ytd-51%

Transports Controladora Vuela

GTMAY

Grupo TMM Transportation Shipping

Financials

Grupo Inbursa Banking

  • 2018 $4.1b, NI=0.9b, Assets 26b, M=10b

This company provides banking and financial services in Mexico. They have subsidiaries which provide services in the following areas: general insurance, investment funds, car insurance, health insurance, mortgages, commercial banking and retirement funds. The market value of the company is $13.3 b

  • Grupo Financiero Inbursa, more simply known as Inbursa, is a leading financial institution in Mexico. Through its subsidiaries, it operates business lines in investment funds, general, automobile and health insurance, mortgages, retirement funds, and commercial banking.
  • Website: inbursa.com – Market Cap.: MX$ 145.4 Billion – Stock Symbol: GFINBURO

Banorte M$19b

  • 2018 Sales $10b, NI $1.7b, 83b Assets,

  • Grupo Financiero Banorte founded in 1899

  • Headquartered in Monterrey, Mexico.
  • Banking and financial services, long-term savings, brokerage, and other financial services like leasing, warehousing, car leasing, factoring, financing and mortgages. The market value of the company is $15.2 b
  • Grupo Financiero Banorte, commonly known as Banorte, is a leading financial institution in Mexico. Through its subsidiaries, it provides banking, brokerage, and warehousing services, as well as leasing and factoring operations. Banorte is also involved in insurance, retirement savings and international money transfer.
  • Website: banorte.com – Market Cap.: MX$ 295.7 Billion – Stock Symbol: GFNORTEO

BSMX c3.7 -46%ytd

Bank - Grupo Financiero Santander Mexico

  • Banco Santander México is a subsidiary of Spanish bank Banco Santander. The bank offers a range of banking and insurance and related services to individuals, businesses and public actors across Mexico.
  • Website: santander.com.mx – Market Cap.: MX$ 172.6 Billion – Stock Symbol: BSMXB

Banco del Bajio

Banco del Bajio, S.A., operating as BanBajío, is one of the major and fastest-growing banks in Mexico. BanBajío provides various commercial banking and insurance products and services to individuals, businesses and public actors.

Website: bb.com.mx – Market Cap.: MX$ 39 Billion – Stock Symbol: BBAJIOO

RC c7.9 ytd-49%

Ready

MXE c7.7 -34%ytd

Mexico Equity

OPES x phe +86%ytd M=77b (10.4-24)

OPESU x phe +30%ytd M106b (10-20)


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