Bloomberg News

Mexichem Posts Best Weekly Gain in Two Years: Mexico City Mover

June 08, 2012

Mexichem SAB (MEXCHEM*), the chemical producer that has bought more than 15 companies since 2007, posted its biggest weekly rally in seven months after investor presentations buoyed optimism over its Wavin NV (WAVIN) purchase.

Shares of the Tlalnepantla, Mexico-based company climbed 7.4 percent since June 1 to 53.31 pesos at the close of trading in Mexico City, the biggest weekly gain since the five days ended Oct. 21.

The shares added 1.5 percent today after the local unit of Banco Bilbao Vizcaya Argentaria SA (BBVA), known as BBVA, raised its recommendation to the equivalent of buy from hold.

Investors should be encouraged after Mexichem raised its 2012 sales target 30 percent to 5.7 billion pesos ($409 million) at a May 31 investor presentation in New York, Jean-Baptiste Bruny, a Mexico City-based analyst at BBVA, wrote in an e-mailed research note today. The new figures take into account the consolidation of Wavin, he said.

The company is poised for a “boom in sales” in part from the consolidation of the Wavin deal, Bruny wrote. “Besides the positive operating scenario, our positive stance is also backed by the group’s confidence and the certainty it affords in a volatile environment.”

The purchase of Wavin, a maker of plastic pipes for sewers, is Mexichem’s largest acquisition.

Mexico’s benchmark IPC (MEXBOL) index increased 0.2 percent today, extending its advance this week to 0.4 percent.

To contact the reporter on this story: Jonathan J. Levin in Mexico City at jlevin20@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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