MOSCOW (MRC) -- Mexichem has returned investors nothing this year but most analysts who rate the stock recommend buying it. That’s because they’re looking ahead, said Hydrocarbonprocessing.
The petrochemical company controlled by billionaire Antonio del Valle Ruiz has the most optimistic outlook of any company on Mexico’s IPC index. It’s expected to gain investors about 26% in 12 months, after losing them 0.7% so far this year, according to analysts’ estimates compiled by Bloomberg. It’s rated a buy by 18 of the analysts and hold by one.
Latin America’s biggest plastic pipe maker is benefiting from its 2014 acquisitions of Dura-Line in the US and Vestolit in Germany, CEO Antonio Carrillo said in a phone interview from the company’s headquarters in Tlalnepantla, Mexico. Rising sales volumes from those units helped boost earnings and counter the impact of weaker currencies in other countries where Mexichem operates, such as Brazil, Carrillo said.
Mexichem’s 95% ratio of buy ratings is followed by Cemex, the biggest cement maker in the Americas, with 91%, and toll-road operator Promotora y Operadora de Infraestructura, or Pinfra, with 88%. Mexichem’s current valuations present an attractive entry point as the company has a "compelling risk-reward profile," Gilberto Garcia, an equity analyst at Barclays, said in an Aug. 13 research report recommending investors buy the stock.
The company, which has negotiated at least 21 deals since 2004, is currently "evaluating some small acquisitions" that could "add immediate value and synergies," said Carrillo, the company’s CEO since 2012. Stable margins and a 2.1 debt-to-Ebitda ratio give the company the flexibility to consider additional buys, he said.
The company reported a 3.5% increase in second-quarter earnings before interest, taxes, depreciation and amortization, or Ebitda, according to data compiled by Bloomberg. The company forecasts that Ebitda, excluding the results of operations in Venezuela and the petrochemical plant joint venture with Pemex, will rise by double digits this year.
Oil, which is used to make Mexichem’s products, such as polyethylene and poly-vinyl chloride, or PVC, has fallen about 60% in New York since last year’s peak in June.
Mexichem, of Tlalnepantla, an industrial municipality close to Mexico City, is Latin Americaп's largest manufacturer of PVC pipe, vinyl resins and compounds. The company has annual revenues of more than USD5 billion and has been listed on the Mexican Stock Exchange for more than 30 years.
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