Homex: Actively Preparing for Potential Slowdown

The Mexican home development company Desarrolladora Homex (NYSE: HXM) reported 'satisfactory' results for 3Q'08, with a revenue growth of 17% year-on-year, but suffered negative net result due to a foreign exchange loss of US$22.09 mln. Total revenues for the third quarter reached US$348.5 million, a 17% growth from 3Q'07. EBITDA grew by 18% year-on-year, and arrived at US$83.5 mln.

Homex's CEO, Gerardo de Nicolás, was quoted in the company's 3Q'08 interim statement in saying that the company is taking pro-active measures in adjusting to a potential slowdown in the mexican real estate market. The company will continue to focus on the entry level market, thus lowering the customer's reliance on bank financing.

By segment, Homex sold 13.711 homes in the Affordable-entry market, which equals 91.47% of the total sales volume. In comparison, the Affordable-entry market constituted 91.64% of total sales in 3Q'07.

Homex's financial position as reported on September 30, 2008, showed the following balances:

Current Assets	$ 1 833,00
Long Term Assets	$ 193,00
Total Assets	$ 2 026,00
Current Liabilities	$ 521,00
Long Term Liabilities	$ 656,00
Total Liabilities	$ 1 177,00
Total Equity	$ 849,00
Inventory	$ 895,00
Intangibles	$ 54,00
Book value (NAV)	$ 795,00
Book value per share	$ 14,20
Book-to-Market ratio	$ 0,56

And the following key financial ratios:

EV/EBITDA	$ 0,62
Current Ratio	$ 3,52
Quick Ratio (Acid Test)	1,80
Debt Ratio	$ 0,58
Debt-to-Equity Ratio	$ 1,39

The company currently trades at a P/E of 7.92, and has a twelve-month performance of (-46.53%).

Technically, Homex broke through the medium-term downtrend in December, under strong buying-pressure, which still persists with RSI at 69.57.

Medium-term resistance is the November high of 25.00.

Long-term the trend is still negative.

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Homex's latest interim statements can be found in our download section.