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Alpek: Quarterly Report 2Q22: Results support Alpek among our top-picks

  • Once more recorded outstanding results given environment dynamics, Octal’s acquisition, and surprising margins

  • Alpek enhanced its EBITDA guidance again, now by 18%, due to the company’s favorable outlook

  • Its financial strength (ND/EBITDA at 1.2x) and attractive valuation (FV/EBITDA of 3.2x) reiterates it in our top picks

Marissa Garza Ostos
Marissa Garza Ostos

Head of Equity Research

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Banorte
25 July 2022
Published byBanorte

Results support Alpek among our top-picks

  • Another record quarter, boosted by environment dynamics, Octal acquisition, and margins that continue to surprise. Once more, Alpek increased its EBITDA comparable guidance, now by 18%

  • The favorable outlook, remarkable financial strength (ND/EBITDA at 1.2x), and a very attractive valuation (FV/EBITDA 3.2x) makes us reiterate Alpek in our top-picks

Results above estimates, which should be well received by the market. Alpek reported revenue growth of 52.1% y/y to MXN 56.398 billion and an EBITDA growth of 85.5% to MXN 10.166 billion, higher-than-anticipated by the market. This led the respective margin to advance 3.2pp y/y, despite environment challenges. Although EBITDA includes a positive effect due to inventory adjustment and raw materials carry-forward effect of ~MXN 2.771 billion ($138 million) given the increase of more than 16% q/q in Brent prices and related raw materials, on comparable basis the increase was ~64% y/y to stand at MXN 7.395 billion, +6.4% above our estimate. This, supported by margins that continued to be higher-than-expected in: (1) Polyester, underpinned by strong demand and the Asia’s benchmark averaging levels of $410 per ton (+15% y/y, -2% t/t) given high transport costs; and (2) in Polypropylene supported by a favorable demand/supply environment −see Pag 3. Once again enhances its 2022 guidance. With margins better than anticipated, and Octal's contribution this year of ~ MXN 120 million, Alpek increased its 2022e EBITDA guidance to $1.6 billion from $1.365 billion (+40% vs 2021), and on a comparable basis from $1.25 billion to $1.475 billion, which we will be incorporating into our projections. With a financial strength that remains remarkable (ND/EBITDA 1.2x vs 1.0x in 1Q22 due to Octal’s acquisition) and a very attractive valuation (FV/EBITDA 3.2x vs 3.5x previously), we consider that Alpek continues to be a very interesting investment alternative, clearly favored by environment dynamics despite the current challenges. Recently, the company announced that it will resume construction of the Corpus Christi PTA-PET plant next August, which will allow it to continue strengthening its vertical structure.

Results by Business Segment