FEMSA, a bet towards retail
After the Presidential elections this month, we saw opportunity on this stock $FMX (Fomento Economico Mexicano SAB-ADR) 8% drop during the declaration of the new president and 17% drop in the 6 months period. The stock peaked Q4 2023 reaching 143$ in anticipation to strong 2023 annual results. They also made substantial unloading of ownership in Heineken which boosted their Q1 2023 as well as FY2023 results. They delivered 38% growth in revenue in the span of 5 years with growth coming from Proximity convenience stores and Coca Cola FEMSA.
For the first quarter of 2024. Proximity Americas grew 11.5% and Coca Cola FEMSA increased 11.6% compared to first quarter of 2023. Investments in Fuel sector also contributed 1.4% growth while Health businesses are still in a loss.
Impact to Portfolio
FEMSA now have 3.7% share in the overall portfolio. An additional to the retail sector bet joining Alibaba. We are slowly transitioning to the retail sector as global inflation cools down and interest rates being reduced. I like FEMSA for the growth trajectory in the retail sector and strong balance sheet with improved liquidity and reduced debt. Their 11B Mexican Pesos share repurchase program for their American Depositary shares completed this June 2024 will enhance capital returns to shareholders is also a positive contribution to future growth.
Other Portfolio Update
We are still moving sideways after recovery from the drop of 3% month to date. We still expect a boost of around +0.3% from the dividends of Agricultural Bank of China. Hoping for the best but my estimate is ending the month with -1%. We will see more clearly the direction after the French elections.
Happy Investing!... Show More
