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Alfa: Quarterly Report 1Q22: Portfolio diversification supports figures

  • Alfa's results were positive and better than our estimates. Revenues increased 24.8% y/y, while EBITDA rose 21.4% y/y

  • Alpek’s figures were positive, Sigma’s Europe challenges impacted profitability, and Axtel continues being affected

  • Given quarter’s figures and the growth in Alpek's guidance, Alfa also raised its 2022e EBITDA by 17% to $2.283 billion

Marissa Garza Ostos
Marissa Garza Ostos

Head of Equity Research

9 May 2022
Published byBanorte

Portfolio diversification supports figures

  • Environment dynamics favored Alpek’s figures, while Sigma’s Europe challenges impacted operations’ profitability. In Axtel, results continue to be very affected

  • Balance sheet strengthening, key businesses focus, and segments independence remain strategic priorities. Meanwhile, the NAV discount is attractive at ~30%

2022 Guidance to the upside, given better Alpek perspectives.  Alfa's results were positive and slightly better than our estimates. Consolidated revenues amounted to MXN 86.028 billion increasing by 24.8% y/y, while EBITDA advanced 21.4% y/y to MXN 13.213 billion. This result was mainly supported  Alpek’s performance, where the favorable oil and raw material environment prices, and higher than expected margins, boosted EBITDA, at record levels in both Polyester and Plastics & Chemicals. This was mitigated by the profitability pressures observed at Sigma, where despite the 7.1% increase y/y in revenues, EBITDA contracted 10.5% y/y due to higher energy costs and some pressures in raw materials, mainly in Europe, which strongly impacted the division results. At Axtel, figures weakness continues with a revenue drop of 10.2% and an EBITDA fall of 21.8% y/y, given that the supply chain restrictions affected the Business segment, while Government segment continues with revenue declines. At net level, profits increased by 38.2% y/y due to operating performance, given the favorable exchange rate effect which was mitigated with an already normalized effective tax rate vs the deferred tax charge registered the previous year. The company's business diversification is a strength given the prevailing environment challenges. As a result of the reported figures and the increase in Alpek's guidance, Alfa also raised its 2022 EBITDA guidance by 17% to $2.283 billion (+24.3% y/y) vs the $1.949 billion that was given before. The triggering value optimization strategy continues, while the discount on the NAV (30.2%) is attractive.  We reiterate our BUY recommendation.