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

LatAm Telcos - EM wireless concentration: LatAm points to Millicom and...

Drawing on the work of our colleague Chris Hoare (HERE for Africa), we broaden out our EM analysis of market concentration in wireless. LatAm screens well, in the largest market of Brazil (5 to 3 consolidation) but crucially also for the smaller caps of Millicom and – best in class – Liberty Latin America which remain the two top picks in the sector.

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.

Millicom (Buy, TP: $24) Q1 24 - Big (10%) EBITDA beat as Xavier Niel c...

On the back of a 1% revenue beat, it was mainly cost which drove a 10% underlying beat at EBITDA.

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.

TIGO (Buy, TP: $24, +35%) Millicom - UPGRADE TO BUY: Xavier Niel helpi...

We have lifted estimates following better than expected Q4s and given the even stronger EFCF guide driven by Xavier Niel and management’s ambitious cost cutting program.