Grupo Mexico 2Q capex $416.6M

Grupo Mexico 2Q capex $416.6M

In its latest financial report, Grupo Mexico (OTCPK:GMBXF) disclosed that its second quarter capital expenditure (capex) amounted to $416.6 million. This figure represents a significant investment in the company's ongoing projects and strategic initiatives.

The company's analysts at Bank of America have recently upgraded Grupo Mexico's stock rating to "Buy" from "Underperform," citing several positive developments. One of the key factors contributing to this upgrade is the decline in the likelihood of Grupo Mexico pursuing the Banamax acquisition, which has helped narrow the stock's net asset value (NAV) discount from a recent peak of 56.4% to 42% [1].

Additionally, Grupo Mexico currently trades at a 42% discount versus the fair value estimate of 35%, making it an attractive investment. The stock also offers a compelling 7.7% free cash flow yield and a 7.7% dividend yield for 2025, further enhancing its appeal to investors. Furthermore, the 50% U.S. import tariff on refined copper increases the economic viability of Grupo Mexico restarting its 135K tons/year Hayden smelter and Amarillo refinery, as per the analysts' assessment [1].

Southern Copper (NYSE:SCCO), another significant entity within the Grupo Mexico group, has also seen improvements in its operational outlook. The company has secured all necessary licenses and has begun constructing access roads for the Tia Maria project, which has faced consistent delays and setbacks. Southern Copper is expected to raise its production to approximately 1.1 million tons by 2029, supported by a robust project pipeline that includes Tia Maria, Michiquillay, El Arco, and Los Chancas [1].

While Southern Copper is a large-cap, first-quartile producer with a long reserve life and plenty of growth potential, Bank of America analysts believe the market already rewards it with a premium valuation compared to its peers [1].

In summary, Grupo Mexico's second quarter capex of $416.6 million underscores its commitment to strategic investments and growth initiatives. The recent upgrade in stock ratings by Bank of America, coupled with the positive developments in both Grupo Mexico and Southern Copper, indicates a promising outlook for the company's future performance.

References:
[1] https://seekingalpha.com/news/4472900-grupo-mexico-double-upgraded-to-buy-from-sell-southern-copper-raised-to-neutral-at-bofa