Seidman Investment Portfolio Organization

 

Company: Wal-Mart De Mexico SAB de CV
Analyst: Phil Elya
Sector: Services

Winter 2010 Buy Summary by: Phil Elya

Summary: Wal-Mart De Mexico SAB de CV (Walmex) is the Mexican division of Wal-Mart (WMT) which trades on the Mexican Stock Exchange as well as over the counter. 68% of WMMVY’s shares are owned by the parent company. Founded in 1977, Walmex operates over 1,400 stores, clubs, and restaurants in 6 countries. In December 2009, Walmex acquired Wal-Mart Centroamerica from WMT, which is the first time WMT has sold off part of its operations.

Analysis: Walmex is intended to benefit the IPO portfolio in a few ways. First, it will increase IPO’s exposure to Latin America, where it currently has minimal exposure. Second, it will add international exposure and further diversify away from strictly US companies. Walmex has great growth potential in a few markets. Its low cost neighborhood supermarkets are the fastest growing parts of its business, which perfectly fits with Mexico’s low-income families. Banco Wal-Mart, Walmex’s banking division, is also a major focusing point as it will benefit it’s nearly 3 million daily customers, of whom 2/3rds don’t haven any relationship with any financial institution. Banco Wal-Mart is sure to increase customer loyalty and increase customer purchasing power.

Possible Dangers:

a)     Stalling growth rates

b)     Poor economic conditions in Mexico leading to spillover into Walmex’s operations

c)      Share dilution resulting from further mergers and acquisitions

 

Page last modified March 11, 2012