Bogotá. – Credicorp Capital lanzó este miércoles un informe detallado en el cual actualiza sus modelos de valoración tanto para Grupo Argos y Cementos Argos, manteniendo sus recomendaciones de compra para ambas empresas.
De acuerdo con Credicorp, “al contrario de lo que se vio en las ofertas de Nutresa y Grupo Sura, el precio ofrecido por Grupo Argos (US$4,28, hoy, según la Tasa Representativa del Mercado, TRM, para mañana $16.419,70) no parece especialmente atractivo y está por debajo de su TP (precio objetivo) de COP 17.600/acción”.
Como se sabe, en las pasadas OPAs por Grupo Sura y Nutresa, Argos manifestó de manera enérgica que no participaría en estas de acuerdo a un estudio de valoración realizado por JP Morgan, en donde se consideraba que las ofertas económicas presentadas no reflejaban un precio justo y no reconocían el valor fundamental del negocio.
El análisis de Credicorp Capital se basa en el documento que contempla la oferta pública de adquisición sobre Argos.
Para Credicorp, “tras la tercera ronda de ofertas públicas de adquisición de Grupo Sura y Nutresa, Gilinski cuenta con un 34,5% y un 30,8% de participación en estas empresas, respectivamente. Los resultados de la tercera OPA (29 de abril) sobre Grupo Sura otorgaron un 2,99% de participación adicional a Gilinski, mientras que la tercera OPA sobre Nutresa fue declarada desierta (16 de mayo) al recibir Nugil aceptaciones muy por debajo del umbral mínimo fijado inicialmente.”
Además, manifiesta que “de cara al futuro, creemos que Gilinski parece haber llegado a un tope tras la infructuosa tercera oferta, y no esperamos otra OPA por Nutresa.”
Asimismo, la comisionista de bolsa contempla que “actualmente, Gilinski tiene dos puestos en la Junta Directiva tanto del Grupo Sura como de Nutresa. Destacamos que si Gilinski adquiere una participación del 32,5% en Grupo Argos, tendría dos miembros en la Junta Directiva. Sin embargo, no esperamos que esto provoque un efecto dominó que le permita tener el control de ninguna de las empresas mencionadas anteriormente.”
Credicorp indicó que “inicialmente, creíamos que Gilinski estaba tratando de obtener el control de Nutresa y luego conseguir los votos suficientes para obtener una mayoría en la Junta Directiva del Grupo Sura, lo que desencadenaría el control de Bancolombia, ya que el Grupo Sura tiene actualmente el control de esa empresa (con el 46,2% de las acciones ordinarias de la compañía). Actualmente, no vemos que Gilinski vaya a conseguir el control de ninguna de las dos empresas a corto plazo y creemos que su estrategia está cambiando para ganar relevancia en GEA gradualmente.”
“Gilinski presentó una solicitud de oferta pública de adquisición de acciones de Grupo Argos, con un precio de 4,28 dólares por acción. A través de esta oferta, Gilinski pretende adquirir una participación en la empresa de entre el 26,0% y el 32,5%. Si Gilinski consigue una participación del 32,5%, tendría dos integrantes en el Consejo de Administración. En este caso, GEA elegiría cuatro directores, mientras que los demás inversores elegirían un director”, manifestó Credicorp.
A continuación el informe completo de Credicorp Capital en donde analiza la Oferta Pública de Adquisición de Gilinski sobre Argos:
Company Update Grupo Argos & Cemargos Maintaining our BUY on both
We are updating our valuation models for both Grupo Argos (BUY; COP 17,600) and Cementos Argos (BUY; COP 7,000), while maintaining our BUY recommendations on both names. In the case of Grupo Argos, beyond the tender offer announced on May 19th, we like the company’s fundamentals due to i) a significant NAV discount (~37%), ii) the close of the transaction with Macquarie as a positive catalyst and iii) its controlling stake in Cementos Argos, which should benefit from the listing of its assets in the US.
• We like Grupo Argos from a short-term perspective as we believe the tender offer announced on May 19th is a short-term catalyst. Indeed, the tendered price of ~COP 16,300 (USD 4.28/share) offers a ~20%upside vs. the last closing price. However, we highlight that, opposite from what we saw in the tender offers for Nutresa and Grupo Sura (UPERF; COP 28,800), this price does not seem particularly attractive as it is below our TP of COP 17,600/share, which includes a 5%discount and a ~30% discount for Pactia and the lands due to their low liquidity. Indeed, if we were to remove this discounts, we arrive at a price of COP 20,200/share (see page 4). However, we acknowledge that a certain ~20% return in the short term does not seemunattractive, vs. a ~10% return for the COLCAP towards YE.
• Attractive NAV discount for the vehicle with Macquarie as a catalyst to unlock value. We are estimating a 37% discount of Grupo Argos vs. its NAV, and we highlight that the market is incorporating a negative value for the non-listed assets (Pactia, the lands and Odinsa, which includes the Macquarie vehicle, Quiport and Opain), vs. a valuation of ~COP 0.9 tn for the Macquarie vehicle alone.
• We are maintaining our BUY recommendation on Cementos Argos. We continue to see good fundamentals in the name despite the negative surprise in 1Q22. Indeed, according to our calculations, a sounder top line offsets lower EBITDA margins from higher energy prices. Our positive view on Cemargos continues to be based on the company’s geographic diversification, benefits from: i) its logistics network, ii) an attractive valuation considering its presence in the USA and iii) a strong top line.
NAV analysis
We believe there is a significant discount in Grupo Argos vs its NAV. Indeed, we are estimating a 37% discount when factoring in a 1.0x P/BV for Pactia, Odinsa and the lands.
Additionally, we found that the market is actually factoring in a negative valuefor Grupo Argos’s non-listed assets as the market capitalization minus thelisted NAV is negative. The listed NAV increased recently, driven by the higherprices of Grupo Sura and Nutresa amid the tender offers that took placeearlier this year.
As of 2021, we found that the market was paying an average of COP 854 bnfor non-listed assets. We consider that it is highly discounted as the vehiclewith Macquarie alone is worth ~COP 0.9 tn. Currently, and possibly related toincreases in the share price of Grupo Sura, the market is actually factoring in anegative value for the sum of Pactia, Odinsa and the lands.
A look at the tender offer process
We introduced different scenarios in a previous report (see report), in whichwe analyzed what would happen if Gilinski got control of Nutresa (after thesecond tender offer) and triggered control over other companies.
After the third round of tender offers for Grupo Sura and Nutresa, Gilinski has34.5% and 30.8% of stake in these companies, respectively. Results of thethird tender offer (29-Apr) for Grupo Sura gave 2.99% of additional stake toGilinski, while the third tender offer for Nutresa was declared void (16-May) asNugil received acceptances far below the minimum threshold initially set. Going forward, we believe that Gilinski seems to have reached a cap after theunsuccessful third offer, and we do not expect another tender offer forNutresa.
Currently, Gilinski has two seats on the BoD of both Grupo Sura and Nutresa. We highlight that if Gilinski were to acquire a 32.5% stake in Grupo Argos, itwould have two members in the BoD. However, we do not expect this totrigger a domino effect that would allow it to hold control of any of thecompanies shown above.
Initially, we believed that Gilinski was trying to gain control of Nutresa andthen get enough votes to get a majority in Grupo Sura’s BoD, which wouldthen trigger control of Bancolombia as Grupo Sura currently holds control ofthat company (with 46.2% of the company’s common shares). We currentlydo not see Gilinski getting control of either company in the short term andbelieve his strategy is shifting towards gaining relevance in GEA gradually.
Shareholder structure
As of 1Q22 (based on the companies’ earnings reports and the report on pensionfunds by the regulator), Grupo Sura has a 36.0% stake in Grupo Argos, Nutresa has a12.5% stake, and pension funds have a 13.7% stake. Based on the 4Q21 report to theregulator (as we do not have more updated info), Amalfi has a 5.7% stake andpension funds have a 13.7% stak.
Grupo Argos Board of Directors analysis
Gilinski filed a tender offer request for Grupo Argos, with a price of USD4.28/common share. Through this tender offer, Gilinski seeks to acquire a stake in thecompany between 26.0% and 32.5%.
If Gilinski gets a 32.5% stake, it would have two members in the BoD. Under thisscenario, GEA would elect four directors, while all the other investors would elect onedirector.
We highlight that if Gilinski acquires a 26.0% stake, it would also have two membersin the BoD. If Gilinski acquires more than ~5.6% but less than ~20%, it would haveone member in the BoD. If Gilinski goes alone while other investors associate with GEA, GEA together with theother investors would elect five directors while Gilinski would elect two directors.
Finally, if GEA goes alone while other investors associate with Gilinski, GEA wouldelect three directors while Gilinski together with the other investors would elect fourdirectors.
Cemargos Rating: BUY TP: COP 7,000/share
Cemargos investment thesis
We are updating our valuation model for Cementos Argos as we arelowering our TP to COP 7,000/share, while maintaining our BUYrecommendation. The adjustment in the TP is mainly explain by a highercost of debt and risk-free rate as we are leaving our estimates (in terms ofcash flow) virtually unchanged. In this line, we continue to see goodfundamentals, despite the negative surprise in 1Q22. Indeed, according toour calculations, a sounder top line offsets lower EBITDA margins fromhigher energy prices. Our positive view on Cemargos continues to be basedon the company’s geographic diversification, benefits from its logisticsnetwork, an attractive valuation considering its presence in the USA and astrong top line.
Utilization of the company’s logistics network to import to the USA. TheUSA market is already experiencing shortages in cement, and Cemargos has a4.5-5.5mn-ton import capacity (vs. a 100mn-ton market) and an exportcapacity of 1.5 mn tons in Cartagena (Colombia). Hence, the company is in anideal position to profit from its geographic diversification and increase itsexposure to the USA (up from the current ~55.5% of revenues as of 2021). Furthermore, the company could add an additional ~2 tons of capacity in theCartagena plant from some equipment it had purchased in the past for theSogamoso project, which did not conclude. Moreover, the company hasbegun to export from Toluviejo, which complements the exports made fromCartagena. Note that the company decides where to export (either the USAor CCA) depending on prices and cargo and fleet availability.
Possible re-rating due to listing of the USA assets in the New York stockexchange. We believe this could lead to a re-rating of the company sincecement companies trade at ~12.1x in the USA and ~6.0x in LatAm andinvestors should favor exposure to the USA (EV/EBITDA 2022E) (see page13). We believe this is explained by a steadier market in the USA with lowerthreats for imports and higher liquidity.
Strong top line. In the case of the USA, we expect the company to continueincreasing prices in all regions. We highlight that Cemargos increased prices inthe USA in Jan-22, and we do not rule out further increases (we areincorporating a 2% additional increase in prices for 2022). Furthermore, weexpect an increase in demand of 4-5% from infrastructure projects. In thecase of Colombia, regarding volumes, we expect single-digit increases withupside risk from infrastructure projects. Colombia has launched severalinfrastructure initiatives, such as 5G projects and the Bogota Metro project, which could lead to a further boost in dispatches. Regarding prices, Cemargosincreased its prices in Jan-22, which negatively impacted volumes andresulted in a market share loss in 1Q22; however, the competition hasfollowed the increase in prices. Finally, imports are no longer a threat due tolower internal prices and high freight costs.
Risks to our thesis. The main risk is an unwillingness of international investorsto enter into the Colombian market, leading to no significant price changessince local pension funds have scarce absorption capacity for the name.
Valuation. We are forecasting EV/EBITDA multiples of 7.1x for 2022YE and7.0x for 2023E. Note that the EV/EBITDA 12M FWD average is 8.4x since2019. As for the P/E multiple, we expect levels of 22.0x for 2022YE and22.8x for 2023E. We highlight that Cemargos has multiples relatively similarto LatAm cement companies, while materials companies in the USA trade at~12x EV/EBITDA 2022YE.
What has changed?
We updated our estimates for Cemargos mainly by including a moreoptimistic outlook in the top line driven by higher prices, with a pressuredEBITDA margin due to energy costs and inflationary pressures. We are alsoupdating our WACC estimate. Our main changes include:
• We are updating our WACC estimate for Cemargos, and we highlight anincrease in the cost of debt of the company. Cost of debt in COP wentfrom 4.7% in our last update (2Q21 results) to 8.0% in 1Q22. This, alongwith a higher risk-free rate (2.6% vs. 1.47% previously) and changes incountry risks, increased our WACC from 8.6% to 10.3%.
• In terms of pricing, we are incorporating higher prices in Colombia and inthe USA as we expect a 2.0% q/q increase in both regions, while wepreviously forecasted relatively flat prices.
• Regarding EBITDA margins, we are forecasting pressured margins in allregions in 2022, mainly due to higher energy prices. We expect EBITDAmargins for 2022 to reach 20.6% (vs. 21.2% previously) in Colombia, 17.2% (vs. 17.5% previously) in the USA and 22.6% (vs. 28.8% previously)in CCA. We expect EBITDA margins in the USA to improve from 2023onwards (our current forecast is 18.1%, vs. 17.5% previously).
Our valuation model
We continue to exclude any impact from IFRS 16 in our model. Our TP is based on a 10-yeardiscounted free cash flow with a 10.3% WACC. Even though our estimates incorporate post-IFRS16 EBITDA figures, we conduct our DCF with our estimates for pre-IFRS 16 EBITDA, which includesoperating rental expenses (amortization of the lease liability). To reach our estimate of equityvalue, we do not discount the lease liabilities, and these liabilities are not included in our leverageestimate.
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