Grupo Argos
BANCOLOMBIA ANALYSIS: COLOMBIAN EQUITY RESEARCH –Company note
Holding
I
April 17, 2015
A True Infrastructure Holding Company
Grupo Argos announced yesterday their intention to acquire an additional 20%-25% of
Grupo Odinsa’s shares at COP9,500/share, in addition to their current 24.8% stake
purchased this week. It is important to mention that the previous transaction amounted to
COP461,635mn/USD184.6mn, with an average price of COP9,495/share.
In our view, this transaction makes sense for Grupo Argos’ strategic portfolio as Grupo
Odinsa is one of the most active infrastructure players in the 4G concession program,
being awarded with two projects: i) Conexion Pacifico 2, with an stake of 25% and a total
investment of COP1,3bn/USD520mn, and ii) a private initiative project called “Malla Vial del
Meta” with a stake of 51% and a total investment of COP1.26bn/USD504mn. This last
project does not require government cash flows and is 100% financed with their own
resources.
With this in mind, we believe Grupo Argos could get important synergies among their
subsidiaries as the cement company (Cementos Argos) could supply the cement required
by Odinsa’s projects, bringing a double benefit for the holding company: i) higher cement
volumes and ii) long-term rents and stable cash flows from the operation and maintenance
of roads and other assets concessions.
Becoming a True Infrastructure Holding Company
In December 2014, Grupo Argos announced their intention to join Conconcreto in a new
vehicle for the development of real estate assets where Conconcreto will provide a total of
405,000sqm in operation, a project inventory of COP957,000mn/USD383mn to be
developed in the coming four years, and expertise in the construction and operation of such
assets, while Grupo Argos will provide 32,000sqm of assets in operation, construction
projects for a total of COP122,000mn/USD48.8mn, and COP365,000mn/USD146mn in
cash to be disbursed in the coming four years.
In addition to this transaction, we have the investment in Odinsa which brings an additional
pillar to their infrastructure group of investments which will give exposure to the most
ambitious infrastructure project in Colombian history.
According to our calculation, Grupo Argos acquired Grupo Odinsa’s 24.8% at a multiple of
7.18x EV/EBITDA 2014 which in our view will bring value to Grupo Argos’ shareholders as
the transaction was made at an attractive price. In addition, it is worth remembering the
potential increase in Odinsa’s EBITDA coming from their concession projects and current
investments.
2013
2014
2015E
2016E
2017E
Net Sales
Operating income
EBITDA
Net income
7,629,359
1,088,447
1,907,000
294,950
8,919,558
1,516,234
2,072,361
380,713
9,798,751
1,269,891
2,218,676
287,413
10,634,590
1,470,861
2,467,919
351,393
11,374,602
1,672,865
2,693,914
402,542
P/E
EV/EBITDA
P/BV
Dividend Yield ord
33.3
9.6
1.1
1.2
32.9
11.4
1.2
1.2
28.4
9.3
1.1
1.4
22.9
8.6
1.1
1.5
19.9
7.9
1.1
1.6
Source: Grupo Argos, Bancolombia
1
23,255
25,590
17,960
17,860
29.5%
30.2%
52 Week Range (COP) ord
52 Week Range (COP) pref
Outstanding Shares (mn) ord
Outstanding Shares (mn) pref
Market Cap (COPmn)
Floating ord
Floating pref
ADV 12 months ord (COPmn)
ADV 12 months pref (COPmn)
Dividend Yield ord
Dividend Yield pref
Total Return ord
Total Return pref
15,960 – 24,180
15,760 – 24,000
645.4
145.6
14,016,904
52%
100%
5,765
3,039
1.5%
1.5%
31%
31.7%
GRUPOARGOS CB
/ PFGRUPOARG CB
Bloomberg:
Grupo Argos vs. COLCAP 12 Months (b. 100)
120
110
100
90
80
70
60
abr-14
Transaction Multiples – Creates Value
Multiples & financials
BUY
Return and Trading Data
Target Price (COP)
Previous TP
Closing Price (April 16) (COP) ord
Closing Price (April 16) (COP) pref
Upside ord
Upside pref
jun-14
ago-14
Grupo Argos ord
oct-14
dic-14
Grpuo Argos pf
Source: Bancolombia, Bloomberg
Analysts
Name:
Phone:
E-mail:
Jairo Julián Agudelo Restrepo
(574) 6047048
[email protected]
Name:
Phone:
E-mail:
German Zúñiga Saavedra
(574) 6047045
[email protected]
feb-15
COLCAP
Grupo Argos I
Holding
April 17, 2015
Grupo Odinsa
Company in the infrastructure sector which develop and manage large scale projects and
concessions in Colombia, Latin America and the Caribbean. It has a diversified portfolio of
concessions in different sectors and future projects to develop locally and internationally.
Their 2025 mega is to build an infrastructure company with COP10bn/USD4bn of assets
under management and a market cap of COP3bn/USD1.2bn. This mega brings in the
operation of four different airport concessions with 10mn passengers a year, 300MW of
additional energy generation, and 20% of assets under management in sectors other than
roads, airports and ports concessions.
Pipeline of Current Concessions
Road Concessions:
Autopistas del Café, Autopista de los llanos, Santa Marta Paraguachon, Hatovial, Conexion
Pacifico 2, Malla Vial del Meta, Via de las Americas, Autopistas del Nordeste (the
Dominican Republic), Boulevard Turistico del Atlantico (the Dominican Republic) and the
Green Corridor (Aruba).
Table 1 –4G concession shortlisted projects
It is worth bearing in mind that the average life of road concessions is 18 years.
In addition, Grupo Odinsa has been shortlisted for the allocation of 6 more 4G concession
projects from public initiative with a potential backlog of COP2.6bn/USD1.04bn.
Furthermore, the company has also presented 5 projects of private initiative, one of them
already allocated to the company, Malla Vial del Meta, one more in the feasibility stage, La
Paila Cajamarca, with an estimated investment of COP1.06bn/USD425mn where the
company has a 100% stake.
Pasto - Rumichaca
Santa ana - Mocoa
Santander de Quilichao - Popayan
Autopista al mar 2
Autopista al Rio Magdalena 1
Autopista al mar 1
ODINSA potential backlog
Airport Concessions:
Opain, which managed the El Dorado International Airport in Bogota, the largest airport in
the region in terms of cargo and the second most important in passengers. It also has
investments in the expansion of the Tocumen airport in Panama.
Ports Concession:
Sociedad Portuaria de Santa Marta has a 24% market share in Colombia, is the second
most important public port in the Atlantic coast. This concession goes until 2033.
Energy Concessions:
GENPAC (Chile). Grupo Odinsa has a stake of 51%, located in the third region with a total
capacity of 96MW which is equivalent to 1% of system capacity in Chile.
GENA (Panamá). With a stake of 59.7% this thermal plant is located in the city of Colon. Its
capacity rose to 150MW which represents 5.4% of total system capacity.
1.
.
2 2
Source: Bancolombia, Grupo Odinsa
Contract value
Odinsa
(COPbn)
stake
1.58
35%
1.2
30%
1.2
1.56
2.13
35%
30%
17.3%
1.537
30%
2.6
Grupo Argos I
Holding
April 17, 2015
Financials
Table 2 – Odinsa’s Revenues by Division (COPmn)
Segregate Revenues
2014 Weights
Road Concessions
Energy Concessions
Operation
252,678
379,267
83,867
27.5%
41.2%
9.1%
construction
Other services
Total
170,293
33,800
919,905
18.5%
3.7%
Source: Bancolombia, Grupo Odinsa
Table 3 – Income Statement Summary (COPmn)
Income Statement (COPmn)
2014
2013
Var% .
Revenues
Gross profit
Operating profit
919,906
429,763
196,724
873,978
410,332
125,071
5.3%
4.7%
57.3%
EBITDA
Net profit
323,070
102,200
275,914
91,696
17.1%
11.5%
46.7%
21.4%
35.1%
11.1%
46.9%
14.3%
31.6%
10.5%
-23.18
707.47
355.00
61.80
Gross margin
Operating margin
EBITDA margin
Net margin
Source: Bancolombia, Grupo Odinsa
Table 4 – Balance Sheet Summary (COPmn)
Balance Sheet (COPmn)
2014
2013
Assets
Liabilities
2,697,017
1,631,047
2,507,653
1,606,651
Var% .
Equity
875,455
741,129
18.1%
Cash
Financial Obligations
172,687
439,405
198,655
446,762
-13.1%
-1.6%
7.6%
1.5%
Minority Interest
190515
159873
19.2%
Net debt
266,718
248,107
7.5%
Source: Bancolombia, Grupo Odinsa
Table 5 – Profitability Ratios
ROA
ROE
Net Debt / EBITDA
2014
3.79%
11.67%
2013
3.66%
12.37%
0.45
0.9
Source: Bancolombia, Grupo Odinsa
1.
.
3 3
Grupo Argos I
Holding
April 17, 2015
Equity Sales
Equity Research
Rupert Stebbings
Jairo Agudelo
Equity Markets Vice President
Head of equity research
[email protected]
[email protected]
+574 6045138
+574 6047048
Natalia Agudelo Parra
Juan Camilo Dauder Sánchez
Equity Sales
Head Energy Analyst
[email protected]
[email protected]
+574 6046498
+574 6049821
Juan Diego Mejia Mendez , CFA, CAIA
Fixed Income
Head Financial & Small Cap
Pablo Caicedo
[email protected]
VP International Business
+571 353 6600 ext. 15237
[email protected]
Diego Buitrago
+571 488 6000
Energy Analyst
[email protected]
Economic Research
+571 7463984 ext. 37307
Juan Pablo Espinosa
German Zuñiga
Head of Economic Research
Infrastructure and Industry Analyst
[email protected]
[email protected]
+571 7463991 ext. 37313
+574 6047045
Alexander Riveros
Senior Economist
Federico Perez Garcia
[email protected]
Oil & Gas Junior Analyst
+571 7463980 ext. 37303
[email protected]
+574 6048172
Research Assistant
Claudia Restrepo
Research Editor
[email protected]
+574 404 3809
4
Grupo Argos I
Holding
April 17, 2015
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