Latin American ADRs Heatmap: Weekly Update

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Includes: ABEV, AMX, ARCO, ARGT, BBD, BFR, BMA, BRFS, BSBR, BSMX, BVN, CBD, CNCO, EC, EPU, ERJ, EWW, EWZ, FMX, GGAL, GGB, GOL, GXG, IBA, ILF, KOF, NTL, OMAB, PAC, PBR, SIM, VALE, VCO
by: LATAM PM

Summary

Mexico's EWW down 3.3% last week as 2Q16 results disappointed. AMX plunged 8.3% while Cemex rose 10.9%.

Brazil´s EWZ continues uptrend posting a weekly gain of 1.2%. VALE ´s results surprised while Ambev missed estimates.

Chile´s ECH down 1.2% as there is no signs of better economic conditions.

  • Stock Top Gainers: BVN +15.3%, CX +10.9%, GGB +8.3%, VALE +8.3% and GRAM +7.8%.
  • Stock top losers: ERJ -14.2%, CBD -10.4%, AMX -8.3%, EC -7.7% and SIM -7.6%.

We will provide you with a weekly update and analysis on what is happening in our all-LatAm sample: ADRs - or at least the most traded ones and country ETFs. Comments are based on closing prices for the previous week (i.e., Friday, July, 29, 2016).

Mixed returns for LatAm equity markets

Brazil´s EWZ (NYSEARCA:EWZ) and Peru´s EPU (NYSEARCA:EPU) posted positive returns of 1.2% and 4.6% while the rest of our LatAm country ETF sample declined. Colombia´s GXG (NYSEARCA:GXG) led losses falling 5.5% followed by Mexico´s EWW (NYSEARCA:EWW) down 3.3%. Major winners where ADRs from Metal & Mining and Materials sectors.

The ILF (NYSEARCA:ILF) declined 0.8%, in-line with the S&P´s 0.1% decline. The ILF´s 1-Month performance accumulates a 7.7% return. Traded volume showed a slight increase from previous weeks.

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ILF Chart

ILF data by YCharts

Brazil´s EWZ up 1.2% continues rally

Brazil´s EWZ closed 1.2% up last week with a cumulative 6-Month return of 67.6%. Brazilian equities show mixed 2Q16 results and government´s deficit stands at highest since the series started.

VALE (NYSE:VALE) and Gerdau (NYSE:GGB) posted the largest gain up 8.3% followed by Electrobras (OTCPK:EBRYY) up 6.4% and BRF (NYSE:BRFS) 5.4% up. Embraer (NYSE:ERJ) led losses, down 14.2%, followed by CBD (NYSE:CBD) down 10.4% and GOL (NYSE:GOL) down 6.6%.

AmBev (NYSE:ABEV) declined 2.2% last week on lower-than-expected 2Q16 results. Revenues increased 4.7% YoY, EBITDA rose 2.0% YoY and profit plunged 22% YoY. Results were affected by weak operations in Brazil and Argentina.

Santander Brasil (NYSE:BSBR) increased 3.1% on better-than-expected 2Q16 results. NII increased 1.7% YoY despite total loan portfolio´s contraction of 4.0%, NPLs stood at 3.2% and earnings were 7.8% up YoY.

Bradesco (NYSE:BBD) declined 1.8% as 2Q16 NPLs increased. The company reported soft 2Q16 numbers exhibiting worsening of credit conditions. NII increased 10.2% YoY despite total loan portfolio´s contraction of 3.7%, NPLs stood at 4.6% and earnings were 7.6% down YoY.

VALE (NYSE:VALE) closed 8.3% higher YoY on better-than-expected 2Q16 results. Revenues were 5.0% down supported by better prices for iron ore, pellets and nickel. EBITDA was 7.6% up and net income was positive $1.1 billion. On the negative side VALE recorded a BRL3.6 billion non-cash provision related to the Samarco legal dispute.

BRF posted a 5.5% weekly gain despite weak 2Q16 report. Revenues increased 7.6% YoY, EBITDA declined 31.6% YoY and profit plunged 91.2% YoY. Results were affected by FX and weak economic scenario in Brazil.

Petrobras (NYSE:PBR) ended the week 2.6% higher on positive asset divestiture outlook. During the week PBR sold its stake in the BM-S-8 Carcara field, the valuation is seen at $2.5 billion (17% stake). In addition PBR announced it expects to receive bidding offers for BR Distribuidora by the end of November. Finally Southern Cross is set to buy PBR´s assets in Chile for $464 million.

Government´s deficit posted its highest primary figure for the same period since the series started of BRL 10.0 billion, the 12-Month balance stood at 2.5% of GDP or BRL151 billion.

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Mexico's EWW down 3.3% as earnings results disappoint and 2Q16 GDP estimate shows QoQ contraction

The EWW ended 3.3% lower with only Cemex posting a positive return out of 12 of the ADRs in our Mexican sample. AMX (NYSE:AMX) led losses falling 8.3% followed by Simec (NYSEMKT:SIM) down 7.6% and Grupo Aeroportuario del Pacífico (NYSE:PAC) down 7.4%.

Cemex posted a +10.9% weekly gain on stronger-than-expected 2Q16 results. Revenues were flat -0.7% YoY (+6.0 Like-to-Like), EBITDA was 6.3% up YoY (+16.0 Like-to-Like) and earnings +80.6% YoY. Earnings were boosted by strong operations and FX gains.

América Móvil (NYSE:AMX) slumped 8.3% on 2Q16 earnings miss. Revenues were 6.1% up, EBITDA declined 10.7% and earnings plunged 45.2% YoY. In addition AMX announced it will divest its 7.8% stake in Telecom Austria (TKA). AMX´s stake in TKA stood at 59.7% as of 2Q16.

Grupo Aeroportuario del Pacífico declined 7.4% on 2Q16 earnings miss. Revenues increased 18.9% YoY boosted by passenger traffic growth of 14.8% and non-aeronautical revenues growth of 3.7%. EBITDA was +17.6% YoY to a 69.1% margin and earnings were 4.0% up YoY. During the week PAC also revised upwards its 2016 guidance to reflect strong traffic growth in 1S16.

Grupo Aeroportuario del Centro Norte (NASDAQ:OMAB) posted a small loss of 0.3% on anticipated strong 2Q16 earnings. Revenues increased 26.4% YoY boosted by passenger traffic growth of 8.7% and non-aeronautical revenues growth of 14.5%. EBITDA was +36.8% YoY to a 62.5% margin and earnings were +60.6% up YoY.

Bachoco (NYSE:IBA) posted a weekly negative return of 2.1% as EBITDA growth decelerates. Revenues increased 12.9% YoY boosted by the recovery of chicken prices in Mexico and the US. EBITDA was +12.0% YoY to a 17.4% margin and earnings were +13.1% up YoY.

Coca-Cola Femsa (NYSE:KOF) declined 4.9% last week on 2Q16 profit miss. Revenues increased 9.3% YoY, EBITDA was +9.5% YoY and earnings were 25.0% down YoY due to FX losses. The company highlighted inorganic growth remains in the pipeline.

Femsa (NYSE:FMX) declined 6.1% last week as 2Q16 results don´t support valuation. Revenues increased 25.9% YoY, EBITDA was +16.2% YoY and earnings were 25.9% up YoY. Earnings were boosted by inorganic growth.

Santander México (NYSE:BSMX) declined 2.6% as 2Q16 results didn´t impressed. Revenues increased 12.9% YoY, total loan portfolio increased 14.7%, NPLs stood at 3.0% with the company easing its credit risk and earnings were 14.5% up YoY.

Economic Activity indicator IGAE posted a 1.9% YoY growth in May. This is the second consecutive month of growth below 2.0% as the industrial sector remains weak. Moreover, the 2Q16 preliminary information by INEGI showed that economic activity cooled down in the 2Q as GDP may have fallen 0.3% QoQ to a 2.4% YoY increase. This is the 1st QoQ decline in 3 years.

Fitch Ratings downgraded PEMEX and CFE to BBB+ from A- (outlook stable) following the cut in Mexico´s sovereign rating.

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Chile´s ECH down as no signs of better economic prospects on sight

ECH closed 1.2% down on weak 2Q16 corporate results and no signs of economic improvement. Only Concha y Toro (NYSE:VCO) and Cencosud (NYSE:CNCO) posted gains of 3.2% and 1.4% respectively. Endesa Americas led loses declining 2.3%

Endesa Americas (EOCA) declined 2.3% last week on weaker-than-expected 2Q16 results. Revenues increased 2.0% YoY, EBITDA declined 2.0% YoY and earnings were $62 million. Weak results were explained by lower prices in Colombia.

Santander Chile (NYSE:BCH) declined 0.6% on weak 2Q16 results. NII declined 1.0% YoY, total loan portfolio expanded 8.0% YoY, NPLs stood at 2.2% and earnings contracted 17.1%.

Monetary Policy Minutes shows no signs of improvement. The Chilean central bank is becoming more dovish as GDP prospects show no improvement for 2016 and 2017 and as inflation may converge to target.

Industrial Production declined 3.5% YoY in June. The decline was larger-than-expected due to a sharp drop in the manufacturing and mining sectors. The pace of contraction accelerated vs previous decline of 2.0% in May.

Retail Sales increase 1.1% YoY in June. This compares positively to the previous increase of 0.5% in May, however the number wasn't enough to boost 2Q16´s figure of 3.2% growth, which negatively compares to the 4.0% increase in 1Q16.

Full number portability on September 5. This will enable customers to switch fixed-line numbers to mobile and vice-versa as well as fixed-line switch across regions.

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Argentina ETF down 1.1%

Argentina´s ARGT (NYSEARCA:ARGT) ended the week 1.1% lower with 11 out of 16 stocks from our sample closing in the red.

Arcos Dorados (NYSE:ARCO) led losses, declining 5.5% followed by the Bank sector, Banco Frances (NYSE:BFR), Banco Macro (NYSE:BMA) and GF Galicia (NASDAQ:GGAL) down 3.4% and 2.7% respectively. On the positive side Nortel (NYSE:NTL) posted the largest weekly gain increasing 4.6%.

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Andean markets: Peru´s EPU leads LatAm gains up 4.6% and Colombia led losses down 5.5%

The Peru fund, the iShares MSCI All Peru Capped ETF (NYSEARCA:EPU), closed the week 4.6% higher with Cia. de Minas Buenaventura (NYSE:BVN) posting the largest gain in our ADR LatAm sample up 15.3%.

President Kuczynski expects to export energy to Chile. The project will benefit Peru, as the country holds a 5,000 MW of energy surplus.

Colombia's GXG (NYSEARCA:GXG) led losses declining 5.5%. Ecopetrol (NYSE:EC) fell the most in our Colombian sample losing 6.7% following oil price retreat.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.