Cobre and Tren Maya boost shares of Grupo México

The shares of Grupo México (GMéxico), conglomerate of businessman Germán Larrea, gained 3.53% on Tuesday on the Mexican Stock Exchange (BMV), driven by the good performance of industrial metals, such as copper, its main production, analysts explained. .

The advance also occurred after the president of Mexico, Andrés Manuel López Obrador (AMLO), held in his morning conference on Monday, that GMéxico breached the contract to build Section 5 South of the Mayan Train and, in addition, demanded compensation .

AMLO said that GMéxico filed a million-dollar lawsuit against his government almost a month ago, which was reported by the newspaper Reforma.

“The rise in shares responds more to the performance of industrial metals and responds to a lesser extent to the controversy that GMéxico did not go ahead with the construction project of a section of the Mayan Train,” explained the director of Analysis at Black Wallstreet Capital , Jacobo Rodriguez.

This Tuesday, the price of copper rose 1.72%, to 7,975.25 dollars a metric ton and aluminum gained 2.10%, to 2,429 dollars, given market expectations that the Chinese government seeks measures to stabilize the economy, as well as the dollar weakness. The Asian country is the main consumer of copper.

Regarding the Mayan Train, GMéxico clarified that the early termination of the contract “was due to the technical impossibility to carry out the project in 11 months and deliver it in July 2023. A breach derived from new requested delivery dates was avoided.”

In a statement, he said that he accepted the government’s proposal that the settlement for the works carried out “derives from the analysis and conciliation with the military engineers.”

He explained that he did not commit “any breach during the term of the contract. All the actions aimed at closing the contract have been part of a legal and administrative procedure established based on the requirements of Fonatur, in a framework of dialogue and good faith”.

It was on January 29, 2021, when GMéxico reported that the National Fund for Tourism Promotion (Fonatur) notified it that it had won the tender, together with Acciona, to build Section 5 South of the Mayan Train.

The consortium formed by Grupo México Infraestructura and Acciona was in charge of preparing the executive project, the construction of the railway and the maintenance of the section that goes from Playa del Carmen to Tulum.

GMéxico estimated that it would take about 25 months to complete the work, while the contract would be valid until December 31, 2027.

The agreed contract was for 17.815 million pesos, with a total term of 82 months, of which six would be the time to prepare the executive project, another 51 for conservation and maintenance works, and the rest would correspond to construction.

However, in July 2022 it was reported that the contract between GMéxico and the federal government related to the Mayan Train works had been terminated early. After the decision, the project would be continued by Sedena, which ceded it to Mota-Engil and ICA.

Little significant

For Jacobo Rodríguez and for the Director of Stock Market Research at Actinver Casa de Bolsa, Valentín Mendoza, the Mayan Train project was relevant within the Infrastructure division of Grupo México due to the constant income it would generate in the coming years.

But, this division has little weight within GMexico, so its impact is insignificant for the consolidated.

“The infrastructure division is small, in the sum of the parts within the conglomerate everything counts, but the bulk of the generation of profits comes from the mining division, followed by rail transport and, to a lesser extent, infrastructure,” explained Valentín Mendoza. .

The infrastructure business represents 5% of GMéxico’s operating flow (EBITDA), according to data from the English bank Barclays.

Given the increase in the price of GMéxico shares on Tuesday, Valentín Mendoza considered that the company’s shares behaved positively on Tuesday mainly due to their “attractive valuation” and the performance of industrial metals.

The increase on Tuesday meant a market gain of 20,631 million pesos, with which the company reached a value of 604,895 million pesos.

The shares of Grupo México fell 11.54% since last January 29, 2021, when it was announced as the winner for the works of Section 5 South of the Mayan Train and at the close of November 22. In the year, it registers a fall of 13 percent.

“Grupo México is a very solid company, but due to the nature of its business, it is highly referenced to the behavior of the international copper price and, therefore, to the performance of world economic activity,” said Jacobo Rodríguez.

judith.santiago@eleconomista.mx