Friday, December 21, 2018

PINFRA Batted Around On Shaky Sentiment Towards Mexico

The honeymoon for Mexico’s new President Andres Manuel Lopez Obrador (often referred to by the acronym “AMLO”) and the relief investors felt immediately after the election didn’t last long, and the cancellation of the Mexico City airport project has certainly not helped. Investors are still struggling to figure out if AMLO is the next Lula, a “leftist” who proved to be quite pragmatic where Brazil’s economy was concerned, or the next Chavez, a leftist who turned Venezuela into a dumpster fire onboard a derailing train. With AMLO’s first budget due in two days (December 15), investors will at least get some sense of the real-world priorities of this new administration and some of the details about how they’ll pursue them.

(OTCPK:PUODY) (PINFRA.MX), the second-largest toll road operator in Mexico, has had a tough year. The shares shot up about 15% in the two months after my last report (wherein I thought PINFRA was undervalued), only to give it all back as the market has turned decidedly more cautious on Mexico’s near-term economic fortunes. There is definitely elevated risk to the PINFRA story, but I really can’t believe that Mexico’s government will upend the concession system that has served the country reasonably well, and the system that will allow it to meet its opposing promises about building out/improving Mexico’s infrastructure without wrecking the company’s budget.

Read more here:
PINFRA Batted Around On Shaky Sentiment Towards Mexico

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