Senior Credit Analyst - Emerging Markets, EM Spreads

Leandro Gubler

Senior Credit Analyst - Emerging Markets

EM Spreads

Credit

<ul>
<li>We downgraded Cemex to Market Perform and do not anticipate that the notes will outperform in the near term.</li>
<li>We continue to view Cemex as an attractive emerging market credit story supported by favorable market conditions, credit-positive strategic priorities, and a commitment to strengthening its credit profile.</li>
<li>We believe the risk/reward profile is skewed to the downside. This view is based on current spread levels, weak earnings results, and elevated near-term political and headline risks.</li>
</ul>


We downgraded Cemex to Market Perform and do not anticipate that the notes will outperform in the near term.
We continue to view Cemex as an attractive emerging market credit story supported by favorable market conditions, credit-positive strategic priorities, and a commitment to strengthening its credit profile.
We believe the risk/reward profile is skewed to the downside. This view is based on current spread levels, weak earnings results, and elevated near-term political and headline risks.


Cemex 3Q24: Long-Term Outlook Clouded by Near-Term Risks

Covering the Mexican Economy, Actinver Research

Actinver

Covering the Mexican Economy

Actinver Research

Actinver is a mexican leading financial group, that generates well being for individuals and companies through advisory services that provides investment management to maintain and grow their wealth.

Macroeconomics

<ul>
<li>Total revenues decreased by 6% to US$4.1 Bn, while EBITDA dropped 13% (or -9% on a like-to-like basis) to US$746 M, below the consensus estimate of US$813 M, and slightly below our US$765 M estimate.</li>
<li>On the other hand, the net profit of US$406 M compares positively vs. the US$126 M in 3Q23.</li>
<li>The higher net income was driven primarily by a lower effective tax rate and the gain from the sale of CEMEX's operations in Guatemala.</li>
</ul>


Total revenues decreased by 6% to US$4.1 Bn, while EBITDA dropped 13% (or -9% on a like-to-like basis) to US$746 M, below the consensus estimate of US$813 M, and slightly below our US$765 M estimate.
On the other hand, the net profit of US$406 M compares positively vs. the US$126 M in 3Q23.
The higher net income was driven primarily by a lower effective tax rate and the gain from the sale of CEMEX's operations in Guatemala.


Actinver Research - CEMEX 3Q24: Bad Weather Negatively Impacted Results (Quick View)

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I (3382 JP)</a>'s roadmap is a solid response to where retailing is headed, both in Japan and elsewhere; while ACT's bid is just about carrying on as now.</li>
<li>
<a href="https://www.smartkarma.com/entities/esr-group-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR (1821 HK)</a> is a non-binding proposal, no official terms, with a fragmented shareholder register. And this is before any opaque PRC regulatory conditions tacked on in a firm Offer.</li>
<li>Murakami-San is up to 23.5% of voting rights in <a href="https://www.smartkarma.com/entities/exedy-corp" target="_blank" data-smartkarma-citation="entities:6516:1" rel="noopener">Exedy Corp (7278 JP)</a>. He would probably need 30% to be able to threaten a board spill.</li>
</ul>



Seven &amp; I (3382 JP)'s roadmap is a solid response to where retailing is headed, both in Japan and elsewhere; while ACT's bid is just about carrying on as now.

ESR (1821 HK) is a non-binding proposal, no official terms, with a fragmented shareholder register. And this is before any opaque PRC regulatory conditions tacked on in a firm Offer.
Murakami-San is up to 23.5% of voting rights in Exedy Corp (7278 JP). He would probably need 30% to be able to threaten a board spill.


Last Week in Event SPACE: Seven & I, ESR, Exedy, CMCDI, Shin Kong

<ul>
<li>I tally 42 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.</li>
<li>One new deals discussed this week: <a href="https://www.smartkarma.com/entities/cemex-holdings-philippines" target="_blank" data-smartkarma-citation="entities:22700:1" rel="noopener">Cemex Holdings Philippines (CHP PM)</a> low-balled MTO.</li>
<li>Key updates took place on: <a href="https://www.smartkarma.com/entities/fuji-soft-inc" target="_blank" data-smartkarma-citation="entities:17504:1" rel="noopener">Fuji Soft Inc (9749 JP)</a>, <a href="https://www.smartkarma.com/entities/shinko-electric-industries" target="_blank" data-smartkarma-citation="entities:15066:1" rel="noopener">Shinko Electric Industries (6967 JP)</a>, <a href="https://www.smartkarma.com/entities/cpmc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10427:1" rel="noopener">CPMC Holdings (906 HK)</a>, <a href="https://www.smartkarma.com/entities/mphb-capital-bhd" target="_blank" data-smartkarma-citation="entities:8540:1" rel="noopener">MPHB Capital (MPHB MK)</a>, and <a href="https://www.smartkarma.com/entities/dyna-mac-holdings-ltd" target="_blank" data-smartkarma-citation="entities:16153:1" rel="noopener">Dyna Mac Holdings (DMHL SP)</a>.</li>
</ul>


I tally 42 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deals discussed this week: Cemex Holdings Philippines (CHP PM) low-balled MTO.
Key updates took place on: Fuji Soft Inc (9749 JP), Shinko Electric Industries (6967 JP), CPMC Holdings (906 HK), MPHB Capital (MPHB MK), and Dyna Mac Holdings (DMHL SP).


(Mostly) Asia-Pac M&A: CEMEX, Fuji Soft, Shinko Electric, CPMC, MPHB Capital, Dyna Mac

Cemex Holdings Philippines / Event-Driven

<ul>
<li>Back on the 25th April 2024, a Dacon/<a href="https://www.smartkarma.com/entities/dmci-holdings-inc" target="_blank" data-smartkarma-citation="entities:8026:1" rel="noopener">DMCI Holdings (DMC PM)</a>-led consortium entered into a SPA to acquire 89.86% in <a href="https://www.smartkarma.com/entities/cemex-holdings-philippines" target="_blank" data-smartkarma-citation="entities:22700:1" rel="noopener">CEXMEX (CHP PM)</a> from <a href="https://www.smartkarma.com/entities/cemex-sab-de-cv" target="_blank" data-smartkarma-citation="entities:24735:1" rel="noopener">Cemex SAB de CV (CEMEXCPO MM)</a>.</li>
<li>The completion of the sale triggered a mandatory tender offer for the remaining 10.14% of shares out. The Offer Price is ₱1.42/share (before considerable fees), a 8% discount to undisturbed.</li>
<li>The Offer Period spans October 23 to November 21. There's the possibility of a technical bump. Don't expect a follow-on delisting Offer. The Bidders' intention is to maintain CEMEX's listing.</li>
</ul>


Back on the 25th April 2024, a Dacon/DMCI Holdings (DMC PM)-led consortium entered into a SPA to acquire 89.86% in CEXMEX (CHP PM) from Cemex SAB de CV (CEMEXCPO MM).
The completion of the sale triggered a mandatory tender offer for the remaining 10.14% of shares out. The Offer Price is ₱1.42/share (before considerable fees), a 8% discount to undisturbed.
The Offer Period spans October 23 to November 21. There's the possibility of a technical bump. Don't expect a follow-on delisting Offer. The Bidders' intention is to maintain CEMEX's listing.


Mexico

Cemex SAB de CV is a building products company. The Company produces, distributes, and markets cement, ready-mix concrete, aggregates, and related building materials. Cemex operates throughout the Americas, Europe, Africa, the Middle East, and Asia.

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Cemex SAB de CV (CEMEXCPO MM)

Cemex 3Q24: Long-Term Outlook Clouded by Near-Term Risks

Cemex downgraded to Market Perform due to downside risk and weak earnings results, but still seen as an attractive emerging market credit story.

Leandro Gubler

Actinver Research - CEMEX 3Q24: Bad Weather Negatively Impacted Results (Quick View)

Total revenues decreased by 6% to US$4.1 Bn, while EBITDA dropped 13% (or -9% on a like-to-like basis) to US$746 M, below the consensus estimate of...

Actinver

Last Week in Event SPACE: Seven & I, ESR, Exedy, CMCDI, Shin Kong

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

(Mostly) Asia-Pac M&A: CEMEX, Fuji Soft, Shinko Electric, CPMC, MPHB Capital, Dyna Mac

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

CEMEX's Low-Balled MTO. For Good Reason

For arb players, there's nothing to see here. Unless CEMEX were to materially fall. For long-onlies, I have no strong opinion on the back-end.

David Blennerhassett

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Cemex 3Q24: Long-Term Outlook Clouded by Near-Term Risks

​Cemex downgraded to Market Perform due to downside risk and weak earnings results, but still seen as an attractive emerging market credit story.

Leandro Gubler

Actinver Research - CEMEX 3Q24: Bad Weather Negatively Impacted Results (Quick View)

Total revenues decreased by 6% to US$4.1 Bn, while EBITDA dropped 13% (or -9% on a like-to-like basis) to US$746 M, below the consensus estimate of...

Actinver

Last Week in Event SPACE: Seven & I, ESR, Exedy, CMCDI, Shin Kong

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

(Mostly) Asia-Pac M&A: CEMEX, Fuji Soft, Shinko Electric, CPMC, MPHB Capital, Dyna Mac

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

CEMEX's Low-Balled MTO. For Good Reason

For arb players, there's nothing to see here. Unless CEMEX were to materially fall. For long-onlies, I have no strong opinion on the back-end.

David Blennerhassett

Cemex downgraded to Market Perform due to downside risk and weak earnings results, but still seen as an attractive emerging market credit story.