Citi Tips Mexico’s PASA

Citi has upgraded Mexico’s Promotora Ambiental (PASA) to buy/speculative risk from hold/speculative risk, but lowered the target price to MXP46 from MXP47 a share. Upside potential comes from Promotora’s good results, reactivation in waste management concession bids and a solid CAGR in PASAS’ Ebitda during the next three years of 23%, versus 6% in its international peers, says Citi. The shop also cites good potential in services to Pemex and a 21% correction in the stock during the last four months. The 2008-2010 projections contemplate CAGR of 15% in sales, 23% in Ebitda and 50% in net income, according to the bank. “PASA’s strong balance sheet and its core business, waste management (counter-cyclical industry), should allow the company to meet its growth targets during the year, if a more complicated economic environment in Mexico develops,” the shop says.