Lucror Analytics - Morning Views Latam

In today's Morning Views publication we comment on developments of the following high yield issuers: Frontera Energy, Aegea, Braskem, YPF, Petrobras, Millicom, Iochpe-Maxion, Canacol, Geopark, Rumo, C&W Communications, Telecom Argentina, Minerva, LATAM Airlines, Aeromexico, Movida

TIGO (Buy, TP: $34, +29%) Millicom - Q3 24: Solid quarter; raised EFCF...

Millicom has reported a solid set of results with improving service revenue trends, a nice reversal in Home Broadband nets adds (driven by Colombia) and strong EFCF this quarter. The company has lifted its FY24 guidance for EFCF to ~$650m from “more than $600m previously” – though consensus is close to this level for FY24.

Cash flow delivery

Strong FCF trajectory continues

Maintaining momentum

Lucror Analytics - Morning Views Latam

In today's Morning Views publication we comment on developments of the following high yield issuers: LATAM Airlines, Minerva, Azul, Vale, Aeromexico, Sigma Alimentos, Millicom, Petrobras, Alpek, CEMEX, Ultrapar

~7,000 towers sale and leaseback

A look into the Colombia potential

A deeper look into the potential in Colombia after the proposed M&A. We see 9% equity FCF accretion potential in our scenario. BUY: 15-16% '25e-'26e FCF yield plus attractive call option value.

Millicom (Buy, TP: $30, +17%) Multiple M&A’s: Millicom (BUY) in Colom...

A series of transactions, involving four separate parties, have been proposed by Millicom (and with a MOU with Telefonica) which could take the patchy Colombian telco market to an effective duopoly, with Millicom as a strong no2. The deal could yet stumble (multiple parties, involves a formal privatization, regulation), will take a little while to consummate, leaves question marks over WOM (which filed for protection locally in April), but we think can comfortably create over $1 billion of syner...

Cash flow delivery on track

Q2 EBITDA in-line, better cash flow

Improvements not appreciated enough

Q2e yet another strong quarter with 21% org. EBITDA growth. We raise '24e-'25e FCF by 10% with increased conviction. Decline bid, BUY cash flow improvements at >14% yield.

EM Telcos EM Enterprise Revenues Continue to Grow Strongly

In this note we revisit and update our thesis that Enterprise in EM is following an S-Curve, using 2023 reported figures. Enterprise customer growth continues to exhibit an S-Curve, and absolute Enterprise revenues added remains very strong in many EMs despite a slowdown in growth rates. We remain bullish on this space.

TIGO (Buy, TP: $30, +30%) Millicom - Upgrades following Q1s support r...

Following strong Q1s last week we have pushed our target to $30, from $24. Underlying upgrades are 5-6% at EBITDA and we have trimmed capex further. Partly mitigating factors are 1/ We have cut our expectation for a dividend from Honduras, and 2/ Built in a 50% likelihood of a devaluation in Bolivia, though this doesn’t appear very imminent (we include in our valuation, not in estimates)

Efficiency masterpiece - up to BUY

Efficiencies well-executed, strong margin lift and low capex. We raise '24e-'26e EBITDA by 5-3%, and FCF by 7-6%. Up to BUY (Hold) on 14-19% '24e-'26e FCF yield with increased conviction.

Strong Q1 across the board

Improving outlook

Q1e: EBITDA growth to reach double-digits, but limited FCF so far. Colombia upgrades on improved competitive outlook. Uncertainty outweighing the attractive 15% FCF yield, keep HOLD.

Millicom - In play

Xavier Niel becomes largest shareholder with 7% stake Says supportive of Millicom’s strategy and management A likely first step only; Millicom now a take-over target

Millicom - Fighting macro headwinds

Q3 growth rates reflect weaker macro trends as expected ’22e-’24e EBITDA -2%, ‘22e EPS -35% on finance losses Risks to outlook and guidance but valuation upside

Millicom - Q3’22: weakening markets

Serv. revs -1%, EBITDA -5% vs ABG and consensus FY’22 guidance for EFCF USD 150-200m in line Cons estimates and shares down by 3-5%