Mexico’s Top Stock Market Players in the Automotive SegmentBy Alejandro Enríquez | Mon, 10/11/2021 - 10:00
Between June and July several companies listed in the Mexican Stock Exchange (BMV) announced their intentions to withdraw their listings. Notably, Santander Bank and Grupo Lala – one of Mexico's largest milk producers – were among those buying back their stock. While the US S&P 500 index was up more than 16 percent in 2020, its Mexican counterpart dropped by 13.7 percent, putting the Mexican stock market “in the doldrums,” according to Forbes US.
There are less than 150 publicly listed companies in Mexico, a number that has virtually stayed the same since 2015, when there 143 companies. Since 2019, there has only been one IPO in the country that raised US$1.1 billion, according to the EY Global IPO Trends 2021 study. By the end of 2020, 140 companies were still part of the stock market.
There are less than 15 companies listed in the Mexican stock exchange with strong automotive-related business, from auto part manufacturers to logistic conglomerates and material suppliers. Nemak and GIS are the only two companies entirely focused on automotive operations. Companies like Vitro and Altos Hornos de Mexico are suppliers of materials for the automotive sector. Others, such as Grupo TMM, Grupo Traxion, and Accel, are mostly focused on logistics operations. Grupo KUO is another industrial conglomerate company participating in several sectors. In automotive, it owns TREMEC, a Tier 1 vehicle transmissions manufacturer.
Who are the main players participating in the Mexican stock market and how are they dealing with the current market complications?
ALFA is one of the oldest groups listed in the Mexican stock exchange. Created in 1974 and listed in 1978, the group is focused entirely on the industrial, food and plastic sectors. One of its subsidiaries, Nemak, is one of the most important Tier 1 companies in the industry. It was listed individually on the stock exchange in July 2003 (BMV: NEMAKA) and in August 2020, ALFA's shareholders approved the spin-off of the entity Controladora Nemak (BMV:NMK), listed in December 2020, which held Alfa’s former shareholding in Nemak, according to the company. Since December 2020, shareholders of both Nemak and Controladora Nemak were working toward consolidating Nemak as a single entity and on Sept. 6, 2021, the companies successfully completed their merger process. From that point on, Controladora Nemak’s stock ceased all trading, being absorbed by Nemak, which stands as the sole trading entity.
Nemak manufactures vehicle structures, powertrain and e-mobility components. The company has 38 plants in 15 countries in the Americas, Europe and Asia, including major markets such as the US, China and India. It has top-shelf customers including BMW, Daimler, Fiat-Chrysler, Ford, GM, Hyundai-KIA, PSA, Renault-Nissan, Toyota and the Volkswagen Group. 52 percent of the company's income comes from the Americas region and Ford, Volkswagen Group, GM and FCA are its main customers. The company reported annual income of US$900 million in 2020. During 2Q21, net sales soared by 109 percent compared to 2Q20. As of Oct. 8, the company’s stock stands at MX$5.09 (US$0.25)
"Throughout our history, we have benefitted from automotive industry expansions, both in Mexico and the rest of the region," said Alberto Sada, Business Development of Nemak.
Grupo Industrial Saltillo
Grupo Industrial Saltillo (BMW:GISSA) is also one of the oldest companies listed on the stock exchange. Founded in 1928 and listed in 1976, the company has presence in Mexico, Spain, Czech Republic, Poland, Italy and China. GIS has solid business in caliper production for braking systems, as well as gray iron production for transmission, suspension and engine components. Other of the group’s business lines include real estate, construction material and water treatment products and systems. Over the last 10 years, GIS’ stock went from MX$9.85 (US$0.48) in April 2010 to MX$29.99 (US$1.45) as of Aug. 20, 2021. During its 2Q21 report, the company highlighted new projects accounting for 80,000 tons of material for braking systems compatible with hybrid and electric vehicles.
Grupo KUO (BMV:KUOB) is an industrial conglomerate with three main business lines: consumer products, chemical products and automotive business. Among the group’s subsidiaries is Tremec, which manufacturers original equipment transmissions, including EV & HEV drivetrain solutions. In the aftermarket, the group owns the brands Dacomsa, FRITEC, TF Victor and Moresa. In 2Q21, the group reported a 42 percent increase in sales compared to 2Q20, driven by sales of transmissions and spare parts for the aftermarket. KUO's stock price has experienced continuous growth over the years, going from MX$12.00 in January 2010 to a peak of MX$50 in March 2021. The company currently trades at MX$45.99 (US$2.22)
Vitro (BMV:VITROA) is one of the leading glass manufacturing companies in North America with more than 100 years of existence. Vitro's fourth largest divisions are OEM and aftermarket for the automotive sector, along with glass recipients for the health sector and the machinery sector. Vitro was forced to suspend production for its automotive business due to the pandemic. Despite this, the company reports positive year-on-year growth in 2Q21 compared to 2Q20, but states that chip shortages and a "complicated environment" in the supply chain have reduced new light vehicle production. In January 2010, Vitro's stock was valued at MX$7.8(US$0.38) per share, reaching a peak of MX$79.36(US$3.89) in August 2017. After a sharp drop in March 2020 due to the pandemic, stock price is set at MX$25.59(US$1.24) as of Oct. 8, 2021.
Altos Hornos de Mexico
Altos Hornos de Mexico (BMV:AHMSA) is one of the largest steel producers in Mexico. The company has a diverse product portfolio that includes solutions for the automotive sector. AHMSA acknowledges that steel price volatility, along with a "lack of investment and maintenance to its industrial plant and iron and carbon mines," has impacted negatively its steel production capacity, with a 450,000-ton reduction against its usual 5-million-ton annual capacity. The company’s stock stands at MX$2.52 (US$0.12) as of Oct. 8, 2021.
Grupo TMM (BMV:TMMA) has more than 60 years of existence. The company became public in December 2017, offering a solid logistics portfolio for air and land transportation. An important share of TMM business is dependent on the automotive industry. The group operates in some of Mexico's most important ports, including Tuxpan, Tampico, Mazanillo, Veracruz, Altamira and Ensenada. The group operates a terminal at the Acapulco port specialized in maneuvers for the auto sector. The company has a solid presence in Aguascalientes, home to Nissan's assembly facility, where it has a large storage facility for automotive components. TMM’s share price has plummeted since 2001. In January 2001, TMM’s stock price was about MX$164.83 (US$7.96), while at the moment it stands at MX$2.84 (US$0.14).
Grupo Traxión (BMV:TRAXIONA) is a conglomerate of logistics and transportation companies. The group's main business lines include cargo mobility, logistics and technology and passenger mobility. According to public fillings, in 2Q21, the company reported a fleet of 8,704 units, 600,593m2 of storage and more than 1,000 clients. Some of the companies in the latter group are: EGOBA, Muebles y Mudanzas (MYM), GRupo SID, Auto Express Frontera Norte, Autotransporters el Bisonte, 4PL, and LIPU.
Among the group of companies presented, TRAXION has had the most successful run so far. Since its listing in September 2017, its stock price has soared 123.26 percent. "The two most important transportation segments we cover are cargo and logistics and personnel and student transportation. Traxión plans to increase its share in these markets and create new opportunities as industrial regions develop a taste for competitive transportation services," told Antonio Tedejo, Financial Planning Director and Investor Relations of Grupo Traxion, to MBN back in late 2018. Grupo Traxión currently trades at MX$34.21 (US$1.65)
Accel Logistica (BMW:ACCELSA) is a logistics and candy company created in 1979 and listed on the Mexican stock exchange since 1988. The company has distribution centers and specialized storage spaces in Mexico's major industrial states including Guanajuato, Jalisco, Chihuahua, Coahuila, State of Mexico, Nuevo Leon, Puebla, Queretaro and Aguascalientes. The company's stock price has also been successful. In January 2010, the stock price was at around MX$6.80 and it has grown to a max of MX$20.50 in August this year. The stock stands at MX$20.5 (US$0.99) as of Oct. 8, 2021.