FEMSA – Is “the most interesting company in MExico” Interesting enough ?
Background:
Whenever I hear a new name from different quality sources I am highly motivated to look at a stock even if it is outside my usual area of competence. FEMSA is such an example. I have seen FEMSA already in two funds of the “TGV Langfrist” family, it is the second largest position at Profitlich/Schmidlin and finally Swen Lorenz featured FEMSA in his latest weekly dispatch.
He mentions another (very good) FEMSA write-up which calls FEMSA “The most interesting company of Mexico” which is a very detailed write-up and highly recommended.
I try to summarize FEMSA in two bullet points:
- FEMSA is a family owned conglomerate, consisting of an (economic) 15% stake in Heineken, a 47% stake in Coca Cola FEMSA (fully consolidated due to majority in votes) and an operating business consisting mostly of Mexican convenience stores called OXXO plus some other LatAm assets that is named the “Commercio” segment
- Especially OXXO is a growing, high ROCE business which justifies a significant valuation multiple
- It is expected that FEMSA monetizes its Heineken stake soon plus the big story is, that based on an existing OXXO prepaid debit card there is the option for OXXO to become the “Super App” of Mexico like WeChat/Tencent in China or Grab and GoJek in SE Asia
The stock chart of the ADR looks unimpressive, basically flat over the last 8 years in EUR terms after a huge rebound from the GFC:
value and opportunity 