MARKETS
The S&P / BMV IPC index was down 1.3% to 51,795.56 pts during the past week, as negative earnings surprises weighed down on some companies, in addition to continued jitters about the potential outcome of the US Presidential election. The Mexican peso was nearly flat, up 0.2%.
The S&P / BMV IPC’s top stock gainers for the week were: PEÑOLES * (+8.3%), ALFA A (+1.7%) and CEMEX CPO (+1.4%). The index’s biggest losers for the most part saw sharp negative stock reactions to weaker than expected results; they included Q* (-11.1%), BBAJIO O (-8.2%) and OMA B (-4.1%).
Next week, we expect the following macroeconomic indicators: the preliminary 3Q24 GDP, trade balance, fiscal balance, business confidence and unemployment figures.
LISTED COMPANIES
TELEVISA announced its Chairman, Emilio Azcárraga, has taken a leave of absence pending resolution of the US Department of Justice investigation into alleged bribes to FIFA. The company also posted weak 3Q24 results, with consolidated sales declining 6.4%, as Sky plunged 13.2% and Cable saw a 3.9% contraction. SKY’s RGUs fell 15.3% on steady cord-cutting. Operating segment income decreased 4.7%. TELEVISA UNIVISION (revenues +2%, adjusted OIBDA +4% in 3Q24) hosted its 2025 Upfront event which included the launching of the third season of “La Casa de Los Famosos México”, Box Televisa, and the return of “El Chavo” and “El Chapulín Colorado” to its flagship channel “Las Estrellas”.
GMEXICO posted a 12.5% increase in revenues. The Mining Division’s revenues rose 17.8%, supported by higher copper and byproduct volumes. Copper production increased 7.1% primarily due to improved output at Southern Peru and Minera Mexico. Transportation Division revenues were down 1.9% despite a 3.0% growth in load volume. EBITDA grew 22.0% YoY with an EBITDA margin of 52.7%, from 49.0% in the prior year.
WALMEX reported softer than expected results, with an 8.0% increase in revenues and decline in operating margins. Same-store sales were up 4.5% in Mexico, and 3.7% in Central America. Gross margin expanded 50 bps to 24.9% from higher contributions from new businesses and enhanced commercial margins in Mexico. The EBITDA margin contracted 20 bps to 10.6% due to growth investments, higher labor costs and a one-off tax provision in 3Q23.
LIVERPOOL’s total revenues advanced 10.4% YoY, driven mainly by a 9.7% increase in commercial sales, +16.3% in financial revenue and +11.9% in real estate. Same-store sales rose 7.6% at Liverpool and Suburbia. The total loan portfolio rose by 16.7% YoY. The NPL ratio was up 63 bps to 4.1%. EBITDA grew 7.3%, weighed down by a 50 bps margin contraction.
GRUMA registered a 4% decline in 3Q24 sales, driven by a 1% volume decline. However, the EBITDA margin improved 130 bps to 17.7%.
CHEDRAUI reported 3Q24 total revenue growth of 11.8% YoY. Same-store sales (SSS) rose 4.9% in Mexico and 0.5% in the US while the sales floor expanded by 2.5% in the last 12 months. EBITDA lagged behind, growing just 3.5% YoY, for a margin of 8.2% due of transition costs associated with the new Rancho Cucamonga Distribution Center (RCDC) in the U.S. Excluding such transition costs, EBITDA grew by 11.1%, with a margin of 8.8%. The EBITDA was supported by improved efficiencies in inventory management and customer promotions in Mexico.
ASUR reported revenue growth of 18.1% YoY, primarily driven by a 19.4% rise in aeronautical services and a 5.0% increase in non-aeronautical services. Total passenger traffic decreased 2.1% YoY (Mexico -10.1%, San Juan +4.6% and Colombia +15.5%). EBITDA grew 12.0% YoY. The Adjusted EBITDA margin decreased to 68.3%, from 69.6%.
GAP’s 3Q24 total revenues increased 11.4% YoY due to a significant 38.7% rise in non-aeronautical services revenues driven by the consolidation of the cargo and free trade zone business at Guadalajara airport. In addition, improvements in concession assets rose 41.1%. However, aeronautical revenues declined 3.8%, as passenger traffic decreased 5.7% due to engine inspections affecting Volaris and VivaAerobus. EBITDA was up 5.6% YoY, with the margin down slightly to 67.0% in 3Q24, from 67.5% in 3Q23.
QUALITAS reported that 3Q24 earned premiums rose 20.1%. The combined ratio improved 134 bps to 95.6% and financial gains were up 12.4%, resulting in net income growth of 12.0%.
ALSEA’s 3Q24 revenues (*excluding the effect of IFRS 16, as well as the effect related to the restatement for hyperinflation in Argentina) increased 9.3% YoY, with SSS rising 7.7%. On constant FX, sales grew 11.7%. The company opened 167 new units during the first nine months of the year and had 8 million active users in loyalty programs. Digital sales (e-commerce, aggregators & loyalty) rose 35%, accounting for 32.5% of total sales. EBITDA grew 9.3%, with a stable 14.0% margin.
ROTOPLAS’ results were affected by weak performance in its Argentinean operations and a slowdown in Mexico due to abnormally heavy rain. Sales were down 6% YoY and EBITDA decreased 47% YoY.
CYDSA registered a 16.2% sales increase in 3Q24 supported by higher demand for edible salt and refrigerant gases, and the contribution from the new chlorine / caustic soda plant. However, profitability was lower due to the reduction in international chemical prices and start-up cost of the new facility.
ALFA’s shareholders approved the spin-off of the company’s shares in Controladora Alpek. ALFA’s shareholders will receive one share of Controladora Alpek for each ALFA share that they hold. This transaction, the final stage of its unlocking value strategy, is expected to take place in 2025.
JAVER reported 3Q24 sales growth of 6.5% YoY driven mainly by a 10.6% increase in the average price per unit, which offset a 3.4% volume reduction. Profitability improved due a stronger sales mix which boosted the EBITDA by 11.8%. The company generated positive free cash flow and reduced its net debt to EBITDA ratio to an all-time low level of 0.56x.
VINTE announced its current shareholders subscribed to 10.3 mm new shares (12.83% of total offered), at a price of MXN$31.00 each for a total amount of MXN$320.7 million, during the preferential subscription period that ended on October 18th. VINTE’s Board of Directors will offer for subscription a portion of the 70.3 mm Remaining New Shares to a group of five institutional investors, which include the company’s current and new shareholders, for an equivalent amount in pesos of US$77 million. VINTE also obtained approval from the IFC for a MXN$1.15 billion loan, in addition to the two credits amounting to MXN$900 million that the company raised on September 27th. VINTE will continue to raise additional equity and debt to complete the acquisition of JAVER.
LASITES’ shareholders approved a MXN$3.0 billion capital increase through the issuance of 1,000,000,000 B-2 series shares at a price of MXN$3.0 each.
TERRAFINA cancelled the certificates holder’s meeting which was originally scheduled for next October 31st to vote on the internalization process.
OTHER COMPANIES
COFECE proposed measures to boost competition in the financial sector which include payroll portability to SOFIPOs, banking migration simplification, make financial information more accessible to users, make it easier for users to cancel products and services, promote digital banking agents, foster the use of alternative payments systems and promote open finance. You can see our thoughts on the matter here.
JÜSTO raised USD70 million which included a USD50 million equity round led by General Atlantic and a USD20 million venture debt financing from HSBC. The online retailer will use these funds to continue executing its growth strategy, mainly in Mexico, improve operating efficiency and redefine the region’s traditional e-commerce channels.
MAPFRE S.A. announced the acquisition of 94% of PROYECTO INSIGNIA, which owns 100% of Mexican life insurance company INSIGNIA LIFE, for an initial payment of MXN$1.616 billion plus and additional variable payment.
CXC, a Mexican private credit platform, raised USD32.6 million in Round A financing led by Kaszek, a Latin American venture capital fund, with the participation of Quona Capital, Mercado Libre, Daedalus Ventures, Saison Capital and Actyus.
SHEIN launched the SHEINxStori / Mastercard credit card in association with Stori.
BITSO appointed Aimee Fearon as its new CFO. She previously worked at Wealthsimple, PWC, Newsela and OnDeckCapital.
TRADE AND ECONOMICS
The inflation rate was 0.43% in the first half of October, which was slightly higher than the 0.39% consensus (Citibanamex Expectations Survey). This led to a last 12-month inflation rate of 4.69% (vs. the 4.66% expectation), with a marginal acceleration against September’s 4.58% level. The core inflation rate was 0.23% (vs. 0.18% E) in the first 15 days of October, translating into an annual inflation rate of 3.87% (vs. 3.82% E), from 3.91% in September.
The Global Economic Activity Index (IGAE) fell 0.3% MoM (vs. consensus of -0.1%) in real terms in August, based on seasonally adjusted figures provided by INEGI, the first decline in four months. This included a 9.1% fall in primary activities and a 0.5% reduction in the secondary sector, which were partially offset by a 0.3% increase in tertiary activities. However, the IGAE rose 0.4% YoY (below consensus of +0.8%) according to original figures, slowing down compared to July’s 3.8% jump.
Analysts expect a 25 bps reduction in Banco de Mexico’s November meeting, according to the Citibanamex Expectations Survey. The median interest rate estimate remained unchanged at 10.00% by YE24 and 8.00% for YE25. They also project an inflation rate of 4.40% (from 4.44% in the previous survey) for 2024 and 3.80% (from 3.81%) for 2025. The core inflation rate forecast remained at 3.80% for 2024 and 3.70% for 2025. The exchange rate prediction increased to MXN$19.80/USD (from MXN$19.67/USD) for 2024 and to MXN$20.10/USD (from MXN$19.95/USD) for 2025. The 2024 GDP growth estimate remained at 1.5% in 2024 but declined to 1.0% (from 1.2%) in 2025.
Retail sales were up 0.1% MoM YoY according to INEGI’s seasonally adjusted data. However, they were down 0.8% YoY. Employees declined 0.8% MoM and 0.3% YoY while average real remunerations rose 2.3% MoM and 7.6% YoY.
The Mexican Government intends to reduce tortilla prices 10% in real terms during the current presidential period, according to Julio Berdegué, Secretary of Agriculture and Rural Development. Such initiative will materialize through the “National Corn and Tortilla Plan”.
The IMF lowered its GDP growth forecasts for Mexico to 1.5% in 2024 and 1.3 for 2025, from 2.2% and 1.6%, respectively.
CETES auction: 28-day CETES -1 bps to 10.20%; 91-day CETES +7 bps to 10.48%; 174-day CETES +4bps to 10.47% and 707-day CETES +35 bps to 10.59%.
Download PDF: MI-MarketChatter-102424