New Street Research - Megacable Hldgs SAB de CV Cert Part Ord Cons of 2 A (MEGACPO) MEGA (Buy, TP: MXN55, +20%) Megacable - falling Capex outlook driving FCF turnaround

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New Street Research

Soomit Datta

EUR 9484.00 For Business Accounts Only

MEGA (Buy, TP: MXN55, +20%) Megacable - falling Capex outlook driving FCF turnaround

We provide a quick outlook (via a key chart) on the slowing FTTH roll in 2024/25 and how we think this plays into capex, supported also by current stronger peso/$, which we see declining from 2024 helping transform FCF prospects. We also preview numbers ahead of Q4: the last quarter of big capex spend we think, with strong operational momentum anticipated, with some seasonality to EBITDA margin.

25/01/2024 1 EN

Underlying

Megacable Hldgs SAB de CV Cert Part Ord Cons of 2 A

Megacable Holdings and its subsidiaries are engaged in the installation, operation, maintenance and exploitation of cabling network distribution, internet and telephone systems.

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MX01ME090003 Mexican Stock Exchange Mexico

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New Street Research

Provided by our team of experienced analysts, our work is idea driven, based on independence of thought, sector expertise, and firmly focussed on fundamentals and valuation.

New Street Research is an independent, partner-owned, research firm specialising in equity and debt research. Our equity research embraces the following sectors:

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Pan European Telecom Services and Cable

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Analysts

Soomit Datta

Other Reports on these Companies

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Mexican Cable/FTTH - Q3 24: MEGA and TPLAY the strongest performers; TV still under pressure

The Mexican fixed market experienced a slight slowdown in revenue and EBITDA trends in Q3 but KPIs remained robust with 423k net additions and continued growth in Broadband penetration.

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AMX(Buy, TP: $24, +24%) Televisa (Neutral, $3.5, +11%) Megacable (Neutral, MXN55, +9%) Mexican FTTH/Cable - Megacable to Neutral on Valuation, AMX top pick into Investor Day

The market continued to eek out broadband growth in Q1, with Megacable leading the charge. We applaud management’s execution here and the double digit revenue and EBITDA growth, though this now seems embedded in expectations; we think it’s time to close out Megacable stock gains (30% YTD), trading on a 5.5% EFCF yield for 2025. Our target remains MXN55, though we have taken out the probability of cable-cable deal synergies, offset by upgrades following Q1s.

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New Street Research

MEGA (Buy, TP: MXN55, +20%) Megacable Q4s - The big capex unwind stars; Earnings call feedback

Megacable reported good Q4s last night with strong broadband adds, revenue growth accelerating (to 14% y/y on core cable/FTTH) and perhaps most supportively EBITDA on core returning to 12% growth on new build operational leverage; EBITDA was flat only a couple of quarters go and the guide is for margin expansion in FY 24 and beyond (ahead of us and the market).

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BILI 3Q24 Results: Gaming to Remain Resilient in 4Q

What’s new: Bilibili’s reported 3Q24 results that were above consensus and our expectations partly driven by gaming. Gaming could continue to grow by high-double digit YoY in 4Q partly driven by San Mou. Margins could also further improve in 4Q partly driven by favorable rev mix and continued cost controls. We maintain our PT at USD 25. Analysts: Jin Yoon

43m 43m 1 EN

Jin Yoon

Jin Yoon

NTES 3Q24 Results: PC to Drive Near-Term Gaming Growth

What’s new: NetEase’s reported 3Q24 revs that were largely in-line with consensus estimates. Mobile games could continue to see tougher YoY comps in 4Q, while PC games could remain resilient partly driven by new game launches and contribution from Blizzard games. We maintain our PT at USD90. Analysts: Jin Yoon

44m 44m 1 EN

Jin Yoon

Jin Yoon

JD 3Q24 Results: Outlook Remains Intact

What’s new: JD’s reported 3Q24 revs that were largely in-line with consensus and our estimates, while margins exceed expectations. FY24 outlook remains intact where rev and GMV growth could continue to outpace total retail sales. Non-GAAP net profit could also grow over 20% YoY in FY24 partly driven by continued GM improvement. We maintain our PT at USD70. Analysts: Jin Yoon

45m 45m 1 EN

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MEGA (Buy, TP: MXN55, +20%) Megacable - falling Capex outlook driving FCF turnaround

Mexican Cable/FTTH - Q3 24: MEGA and TPLAY the strongest performers; TV still under pressure

AMX(Buy, TP: $24, +24%) Televisa (Neutral, $3.5, +11%) Megacable (Neutral, MXN55, +9%) Mexican FTTH/Cable - Megacable to Neutral on Valuation, AMX top pick into Investor Day

MEGA (Buy, TP: MXN55, +20%) Megacable Q4s - The big capex unwind stars; Earnings call feedback

BILI 3Q24 Results: Gaming to Remain Resilient in 4Q

NTES 3Q24 Results: PC to Drive Near-Term Gaming Growth

JD 3Q24 Results: Outlook Remains Intact

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