Ica Jumps Most Since October on Debt Outlook: Mexico City Mover
Empresas Ica SAB, Mexico’s biggest construction company, climbed the most in three months amid optimism the completion of government projects this year will help reduce debt.
Shares (ICA*) surged 9.3 percent to 20.76 pesos in Mexico City trading today, the steepest advance since Oct. 28. The benchmark IPC index of 35 stocks rose 1 percent.
Ica is a bargain after it dropped 46 percent last year as debt mounted and investors shunned companies with highly leveraged balance sheets amid concern Europe’s debt crisis would squelch global growth, said Gonzalo Fernandez, an analyst at Banco Santander SA. Payments due this year on construction projects may help reduce indebtedness, Fernandez said.
“The company had a strong reaction last year,” Fernandez said by phone from Mexico City. This year “we could have the opposite effect as the company starts to cut its debt.”
Santander named Ica one of its “top picks for 2012” and reiterated a “buy” recommendation on the stock in a report dated yesterday.
Ica’s net debt rose 30 percent to 34.1 billion pesos in the third-quarter, from the end of 2010, according to its Oct. 27 report.
The company will use a payment of about $1 billion due this year for construction of the La Yesca dam project on Mexico’s Santiago River and $220 million in net proceeds from the sale of a toll highway in Panama to reduce debt, Chief Operating Officer Alonso Quintana said in an Aug. 25 interview.
There’s no additional information to disclose that may be causing today’s surge, the company said in a filing to the exchange.
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