Category: Mexico

UBS Pactual has cut its equity valuation on Mexico’s Axtel to neutral based on the fact that it is trading at a premium to its peers. “Based on our estimates, Axtel is trading at an estimated 8.7 times 2008,” says UBS. “Stock is up 174% year-to-date, and four-fold in the past 12 months,” it adds. This compares to just 21% for the IPC index year-to-date, and 31% for Telmex and 47% for America Movil. Competition and technology are seen as the main risks, as cable providers ramp up triple-play offers. Upside risks include M&A and number portability. “At the current price, and given the risks, we believe Axtel is fairly priced,” says UBS.

Southern Copper Corporation has approved a new investment program in Peru to replace a plan that had been agreed for Mexico. The $2.108bn plan covers the development in Peru of the Tia Maria SX/EW copper project, the Toquepala concentrator expansion, the Cuajone concentrator expansion, the Ilo smelter expansion and the Ilo copper refinery expansion. “This investment would permit the company to increase its copper production by 270,000 tons per year by 2011, which represents 39% of the current production level,” says the firm.

UBS Pactual has cut its equity valuation on Mexico’s Axtel to neutral based on the fact that it is trading at a premium to its peers. “Based on our estimates, Axtel is trading at an estimated 8.7 times 2008,” says UBS. “Stock is up 174% year-to-date, and four-fold in the past 12 months,” it adds. This compares to just 21% for the IPC index year-to-date, and 31% for Telmex and 47% for America Movil. Competition and technology are seen as the main risks, as cable providers ramp up triple-play offers. Upside risks include M&A and number portability. “At the current price, and given the risks, we believe Axtel is fairly priced,” says UBS.

Pemex has issued a call for national and international companies to bid on $1bn in tenders. The projects include drilling wells in northern Mexico and maintenance work in several locations, beginning in first quarter 2008.

Mexican telecom Maxcom raised about $205m in simultaneous offerings on the Bolsa and NYSE last week. Mexican shares, accounting for $40 million of the proceeds, priced at MXP27.10 and US ADRs priced at $17.50, both at the high end of expected ranges. “We went where there was the strongest demand,” CEO Rene Sagastuy tells LatinFinance, regarding the choice of the simultaneous foreign and domestic issue. Maxcom plans to spend $125m per year in 2008-2010 to add at least 100,000 new customers each year. The market is dominated by rival Telmex, but it offers ample room to grow, particularly in the lower-middle income sectors which Maxcom targets. Despite reporting a net loss of $1.6m for the first half of 2007, CFO José Solbes says Maxcom expects to post a net profit for 2008. The offering was 12 times oversubscribed, Solbes says, and went mainly to EM-focused long-term holders. Bank of America and other stakeholders raised an additional $52 million from the sale, led by Morgan Stanley in the US and Ixe in Mexico.

Mexican telecom Maxcom raised about $205m in simultaneous offerings on the Bolsa and NYSE last week. Mexican shares, accounting for $40 million of the proceeds, priced at MXP27.10 and US ADRs priced at $17.50, both at the high end of expected ranges. “We went where there was the strongest demand,” CEO Rene Sagastuy tells LatinFinance, regarding the choice of the simultaneous foreign and domestic issue. Maxcom plans to spend $125m per year in 2008-2010 to add at least 100,000 new customers each year. The market is dominated by rival Telmex, but it offers ample room to grow, particularly in the lower-middle income sectors which Maxcom targets. Despite reporting a net loss of $1.6m for the first half of 2007, CFO José Solbes says Maxcom expects to post a net profit for 2008. The offering was 12 times oversubscribed, Solbes says, and went mainly to EM-focused long-term holders. Bank of America and other stakeholders raised an additional $52 million from the sale, led by Morgan Stanley in the US and Ixe in Mexico.

Pemex has issued a call for national and international companies to bid on $1bn in tenders. The projects include drilling wells in northern Mexico and maintenance work in several locations, beginning in first quarter 2008.

Mexican microfinance lender Financiera Independencia, plans to list up to 20% of the company, or 136m shares, on the local stock exchange later this year. Controlling shareholder Jose Luis Rion, president of the board, would see his stake reduced to 54.9% from 68.8%, while a stake owned by HSBC would fall to 18.68% from 19.99%. The Grupo Bursatil Mexicano brokerage will act as the lead placement agent in Mexico, while Credit Suisse will handle the international issue. Although the date and initial share price were not disclosed in the prospectus, Independencia provided an estimated price range of MXP22-MXP30 a share, which would value the company at MXP14.96bn-MXP20.4bn.

Citi has upgraded to buy Grupo Financiero Inbursa on improving business conditions and solid operating performance. “Since mid August (when the Mexican market began its recovery) to date, Inbursa has underperformed the MSEI by 23.6% and since the beginning of July, Inbursa’s share price return has been in line with the market’s (+2.0%),” says Citi. It also raised Copel to hold from sell, based on recent performance and adjusted the price target to 33 reais a share.

Eton Park, a New York-based multi-strategy fund and Axis, a Mexico City-based private equity shop, said Wednesday they have started a new company called Navix that will specialize in LatAm structured lending. The company is registered as a SOFOM, or specialty finance company that has raised $100m in equity finance. The next step will be to lever up its balance sheet with loans and credit lines and begin structuring asset-based loans to mid-market companies. “The needs of most Mexican corporates are underserved by the local financial institutions,” Gonzalo Gil White, managing partner at Axis and the CEO of Navix, tells LatinFinance. Navix will target a variety of sectors initially in Mexico, but very likely in other countries like Brazil eventually as well. One of its focuses includes short-term project and working capital loans for energy sector companies. Eton Park is the majority equity holder in the venture.