Cemex Latam Holdings SA (CLH), a cement maker in Central and South America, rose after Banco Santander SA said the shares should trade at a premium to those of the company’s biggest Colombian competitor, Cementos Argos SA. (CEMARGOS)
The shares advanced 1.7 percent to 12,920 pesos at 12:36 p.m. in Bogota for the biggest increase on a closing basis since Feb. 22. The benchmark Colcap index climbed 0.2 percent.
Cemex Latam “offers a buying opportunity” as the shares deserve to trade at a premium to Cemargos given its profitability and outlook for cash flow generation, analysts Andres Soto and Pedro Balcao Reis wrote in e-mailed report late yesterday.
The company’s enterprise value is eight times Santander’s forecast for earnings before interest, taxes, depreciation and amortization, or Ebitda, compared with 7.8 times for Cemargos, according to the report. Cemex Latam’s ratio should rise to 8.8 times in 2016, compared with 8.3 times for Cemargos at that point, the analysts wrote.
Bogota-based Cemex Latam will gain 12 percent to a year-end target price of 14,500 pesos, according to Santander.
Cemex Latam has gained 5.5 percent since the company’s Monterrey, Mexico-based parent Cemex SAB sold the shares in November.
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