The pandemic isn't over and operating conditions aren't fully back to where they were in 2019 (at least in some respects), but FEMSA (FMX) is doing better as activity in Latin America, and Mexico in particular, gets back to normal. In addition to strong traffic and shopping trends in the core OXXO convenience stores, the performance of the drugstores continues to improve, and modifications to the framework agreement between Coca-Cola FEMSA (KOF) and Coca-Cola (KO) should keep that business on a good path.
I continue to expect around 7% long-term revenue growth from FEMSA as it continues to expand its convenience stores and drugstores across Latin America, while also pursuing opportunities like spin and Premia to enhance the value of its OXXO customer base. M&A likewise remains a potential driver, with management sounding more interested in resuming consolidation in the bottling business than they have in some time. All in all, I continue to believe that FEMSA offers an attractive valuation, as well as broad exposure to Latin American consumers.
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