Archive for the ‘latin america’ Category

Wind of change comes to Chile

president bacheletLatin American nations are leading their Western counterparts with respect to diversity in renewable energy. Now GDF Suez has opened its 38 MW wind farm facility at Monte Redondo in Chile.

Work on the wind farm began at the start of this year, with more than $100 million being invested, as GDF Suez commits to it’s green credentials in it’s South American operations. According to estimates, Monte Redondo will prevent the emission of 54,000 tones of CO2 per year, whilst providing energy for up to 60,000 homes.

“GDF SUEZ strongly believes in Chile and in the development opportunities it offers. The Group holds broad and multiple areas of expertise in this country and intends to further reinforce them.” said Gerard Mestrallet at the inauguration

Monte Redondo will also assist in providing long term stability in energy prices, as GDF Suez has already entered into a 14 year supply contract for 100 GWh/year, beginning in January 2010. Chile has historically been dependant upon gas imports from Argentina, which have been the subject of much contention, as Argentina seeks to secure it’s own domestic energy requirements & supply has fluctuated from agreed measures.

Chilean President Bachelet said that clean energy investments have grown sharply from a mere 2 MW in 2006 to 250 MW in 2010 & it would seem that this may be only the beginning of a love affair with wind power. By the end of the 2009, a further five new wind parks will begin operating in Chile, increasing the country’s wind energy production by a factor of 10.

These new projects are slated to produce 180 MW of wind energy, dwarfing the existing 20 MW currently produced by Chile’s two existing projects. According to the National Energy Commission, other new wind turbine projects which are currently under review or in planning will soon generate 1,500 MW for the country’s Central Power Grid. To put this into perspective, the country’s largest proposed hydro-electric project, Ralco, will provide 690 MW at full capacity.

It is encouraging to see real commitment from what people in the West term “developing” markets, Chile & Brazil are world leaders in the advancement of renewable energy & also in implementation of green policies down to grass roots level. Perhaps those of us in our ivory towers in Europe & the Us should pay a little more attention to what is being implemented in the southern hemisphere.

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HP expands ProCurveOne operations into LatAm

ProCurve-logo-Hewlett-Packard has announced that it will be expanding it’s sales operations for networking division ProCurve from Mexico into the rest of Latin America of its networking division, ProCurve, beyond Mexico. ProCurve products & services will now be available in Argentina, Brazil, Chile, Colombia, Peru, Venezuela & Costa Rica.

“We know we will be using a direct and indirect sales strategy as the ProCurve product line is extensive, and in some cases allows for both sales models,” said Alfredo Yepez, who manages HP’s Lat-Am Enterprise Storage & Servers operations. “Many of our channels today have some type of specialization in the networking area as they have previously distributed solutions from our competitors and are interested in representing ProCurve. So we will leverage the relationship with our current partners that have experience in the networking business as a first step, and then develop other partners in a second stage”

The company has recently lunched HP ProCurveOne, which is a flexible suite of applications from leading ISV’s, including Microsoft,Avaya, McAfee, F5 and Riverbed, that can be integrated into the existing architecture of Enterprises, with management being provided by a central platform.

The new approach from HP (Nasdaq:HPQ) seems likely to pay off, as Felipe Ortega, Manager ProCurve of the recently opened R&D centre in Costa Rica reported, even without selling solutions across Latin America, the company has managed to become the second largest provider of networking products globally, after Cisco (Nasdaq: CSCO), in terms of both revenue & market share.

“We are also developing high-speed chips for networks, software solutions for management and connectivity monitoring of large datacenters. The fourth area is networking security for both wired and wireless networks,” he added.

Original article at MyStockVoice

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Strong VAS revenues offset by weak dollar for Millicom

millicomEmerging Markets focussed telecom operator Millicom International (Nasdaq:MICC) has  posted a 12% decrease in net profits of US$143mn in the third quarter of 2009 compared to US$161mn in the same quarter a year ago, the company said in a statement.

Overall revenues were up 7% to US$856mn compared to US$800mn a year ago. However, top line figures have been heavilyimpacted by the dollar exchange rate across all of it’s markets, resulting in a 9% negative translation impact, the company said.

EBITDA has  increased 13% to US$392mn year-on-year, while  margin was 45.8%, up 2.6% compared to Q3 as a result of cost control initiatives and strong growth in higher margin Value Added Services (VAS) revenues. In Central America, Millicom’s Tigo brand returned a margin of 55.2% and in South America the margin increased to 40.7%.

Speaking during a conference call with investors, Millicom‘s CEO Mikael Grahne said the company had seen a lower level of customer intake in Central America, reflecting high voice penetration and an increasing focus on higher value customers and Value Added Services.

For the group, VAS revenue was up an encouraging 46% in the quarter in local currency terms and represented 19% of recurring mobile revenues. Demand for 3G services remains high in Latin America, especially for datacard customers. Paraguay represented the best market overall for VAS, where it brought in 30% of mobile revenues. Grahne said that in the long term, the company is aiming to have VAS represent an average of 25% of revenues across all markets.

In Central America, Honduras grew its customer base 11% year-on-year despite the entry of a third operator Digicel in late 2008. Guatemala grew its customer base by 19% and El Salvador 10%. Net additions were lower in Central America resulting from a combination of high penetration, weaker economic conditions and an increased focus on high quality customers, the company said.

In South America, total customers increased by 17% year on year, with Bolivia surging 47%. In Colombia, the increase was 9% and in Paraguay 12%. Constant currency ARPU in South America was up 2%, while in Central America it fell 5%. This was mainly a result of lower ARPU in Honduras, which was negatively affected by a new regulatory tax on international inbound traffic and continued promotional activity by competitors.

Grahne said that capex for 2010 would be US$700mn, US$50mn of which is held over from 2009. Though not giving a break down, Grahne said that capex in Central and South America would increase in 2010 as the company steps up investment in 3G capacity and coverage.

Millicom’s internet and TV assets that it purchased last year, Amnet and Navega, saw a sequential decline in EBITDA margins to 43% from 45% of revenues in Q2, which Grahne attributed to restructuring changes since the acquisition, but forecast that the margin would rise over time. Millicom also expects capex for Amnet to be lower in the medium term as the company focuses on increasing customer penetration with its existing footprint, rather than extending coverage.

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Brazilian Banking, a tale of IPO’s & ADR issues

banco do brasilState controlled banking behemoth Banco de Brasil has been involved in a three way battle with it’s private peers Itau-Unibanco (NYSE:ITUB) & Banco de Bradesco (NYSE:BBD) for some time for dominance in the growing domestic banking sector. Having surpassed ITUB in the second quarter, mainly due to lower interest rates attracting borrowers, Banco de Brasil has now announced that is looking to change it’s stance regards international stockholders.

Yesterday, a spokeswoman for the company revealed that the bank is now looking to double the potential foreign ownership in Bovespa traded shares from the current 11% by raising it’s free float of shares to 25%.

On the same call, she also advised that the bank has appointed an advisory bank regards launching an ADR offering on the NYSE, similar to it’s two biggest rivals, the programme could be launched by the end of this year.

“We are talking about two movements that aim to improve the attractiveness of the shares,” Marco Geovanne Tobias da Silva, said in a telephone interview with Bloomberg. “We are increasing the number of potential investors to our shares.”

Banco de Brasil has performed well this year, having outperformed the Bovespa average by some margin. As we have discussed in previous articles, the banking sector in Brazil has been going through a wave of consolidation & the state bank has just added to its growing portfolio via the acquisition of a 49.99% stake in Banco Votorantim for 4.2 billion reals ($2.3Bn) earlier this month.

Meanwhile, Spain’s Santander (NYSE:STD) is now looking at a local IPO that should see an initial raising of $200 million (equivalent to 15% of current valuation) that will be used to expand its reach across the country. At the same time, Santander also said that it will launch an ADR programme for the local listing.

With only a single IPO so far this year with Visa affiliate VisaNet, Brazil now has 12 companies that have registered since the end of July for potential listings. The VisaNet launch was hugely oversubscribed & raised a Brazilian record of $4.5Bn in its sale, much to the benefit of Bradesco.

Much of this is fuelled by local retail interest, as the Brazilian middle classes are growing, however, there are also signs that foreign investors are looking at Brazil as the next BRIC economy to really get going, with Credit Suisse (NYSE:CS) coming out with a bullish statement yesterday.

“Brazil is in style for foreigners,” said Ilan Ryfer at Credit Suisse Hedging Griffo, Brazil’s biggest hedge fund. “Everyone thinks it’s a bull market again and the party’s back. Investors have short memories.”

Much of the excitement around Brazilian stocks is fuelled by its BRIC partner China, as the Chinese economy starts to lift again, commodities are very much back in vogue. South Africa’s Investec Asset Management is looking at Brazil & neighbours Chile & Peru to lead the way in South America, as Chinese demand for raw materials is set to grow.

So Viva Brasilia !! & being a bull on emerging markets & Brazil in particular, I am looking forward to the Banco de Brasil & Santander IPO’s with great interest.

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MyStockVoice.com is now alive & kicking

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It’s taken a while & it’s been an interesting experience, but am pleased to say that we released MyStockVoice.com into public beta. For me personally, there have been a few challenges, “assisted” along the way by re-locating with my family from Switzerland to Slovakia.

The team at Connection Services who have designed & support the MSV platform have been excellent, especially when responding to an ever changing set of requirements. MyStockVoice started as this WordPress blog, where I could muse on my views on Emerging Markets & BRIC economies. A conversation with a friend who works in the City (London) encouraged me to look at doing something a little more. The original format, was a forum, then a newswire service & now it’s a fully fledged blog publication platform. So you can imagine how happy my colleagues at CSL were, when I tripped back every few months & said “right, this is what we are doing now”

Our aim at MSV is to provide an ever widening audience with value insights into what is rapidly becoming a major topic for hedge funds, investment managers & retail investors alike : BRIC & Emerging Markets. International stocks traded on US exchanges are becoming ever more popular, especially via Depositary Receipts (ADR,ADS,ADN) , for the more cautious or long minded, a number of ETF (Exchange Traded Funds) have sprung up to service the appetite to take part in these growing economies.

Covering all the major regions, MSV provides focussed channels into a variety of sectors & also specific categories for Macro Econmics, ADR & ETF investing. We are pleased to be working with some well established names from the investment community, along with faculties such as Knowledge at Wharton, the Economics Faculty at Beijing University, Skolkovo Business School in Moscow & Cranfiedl University in the UK.

Our strapline is “your community … your voice”  & to reflect this, we will be bringing our readers plenty of new unique content. Much of my time in the last two to three months has been spent contacting individual bloggers & also online media services that are based in the regions covered. In this way, we can present a “blend of thought”, that will allow our subscribers to formulate informed opinions on their own particular areas of interest.

So, enough jawing from me, but to close, Alex, Chris & myself would like to thank the team at CS & all the people that have had input into the project. We sincerely hope that you enjoy the MSV experience & are always open to new ideas, partnership opportunities & most of all feedback.

Many thanks

Paul

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SQM – steady as she goes

sociedad-qumica-y-minera-de-chileSociedad Qumica y Minera de Chile or SQM for short, has not been in the news of late, so has been off of my radar.  Having had some spare time yesterday, I have been revisiting a few old friends & this stock has caught my eye for a couple of reasons.

  • Its the fourth largest holdings in the iShares MSCI Chile Index – ECH
  • That index has performed very well & looks to continue its steady upwards trace
  • At the end of April, SQM reported some surprising figures year on year (Q1 2009 v 2008) : net revenue increas of 33% on 2008, with the NYSE traded ADRs providing earnings of $0.33 per share, compared to $0.25 share in Q1 2008.
  • As if that wasn’t enough, to round off this bullish performance, SQM also showed a 39% increase in operating income.

For those that are not familiar with SQM, it is primarily a producer of fertiliser for agricultural, infield use. The company has however diversified into other lines in the past few years.

In fact, SQM is the largest producer of Iodine & Iodine derivatives globally, which has a number of non-agricultural applications, including medical & industrial. SQM to date, holds rights to the largest source of Caliche Ore in northern Chile.

At present, SQM is also the largest producer of lithium globally as it owns the production rights from the Atacama Salar deposits in the Andes. As the potential for Lithium hydroxide batteries for automotive use is becoming more apparent, SQM are set to be in pole position to exploit any upcoming technical breakthroughs.

The final string in the production bow, is that it has a very strong product line in nitrates for use in agriculture, industry & petrochemicals. SQM are also looking at solar power using Sodium & Potassium Nitrate as a heat transfer medium. With solar being very much in the public (& investor consciousness), this could be a key area for them in the very near future.

Now moving on from the “bleeding obvious” (7.48), if you have a browser, you can Google all of this in less than 10 minutes. What has really got me going is the latest charts that SQM has produced.

SQM

Since the large market correction im March, the stock has performed remarkably well, especially considering the recent volatility of its perceived peers : MON, AGU, POT etc have all been up & down like the proverbial tarts knickers. In the last month, even whilst others have been selling off & also under some pretty heavy selling volumes itself, SQM has managed to keep its head above water & is defiantly holding to a very narrow trading range between its 50 & 20 day SMA. Tough little blighter. Even more important for me is the RSI indicator, which is running reasonably flat & not trending up or down from the 50 mark since mid-June.

Turning to the P&F chart, we can see that SQM has had a definite upward trend for the last 6 months. Any drop in the current price looks as though it will soon correct to the upside & the Price Objective yielded is 53.00 which is a significant premium on Thursday’s close at 36.13.

SQM PFAm expecting to see some volume coming into the stock shortly & have a personal price target of 45 before I look at halfing out & looking for pullbacks.

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Vale to sweep up as Rio “fails” in Chinese espionage fiasco

bulk ore carrierThis post from China News Wrap is significant, as it’s sourced locally from International Financial News, which is a Peoples Party owned newspaper. China informs Australia that proof is irrefutable (sic) Basically the Chinese authorities are not going to back off, having been snubbed over the Chinalco deal. I reckon this will run & be very detrimental for both Rio & BHP Billiton. Anyyone else noted that both firms have been talking up inventories being built up elsewhere ? The real deal is in the 2nd last paragraph of the story :

“At the same time, although Rio Tinto had made statements last week emphasizing that it would ‘continue its iron-ore operations in China’, the actual situation does not seem to reflect this. The overseas media yesterday reported that shipments of spot market iron-ore from Brazil to China soared to record highs in July, which could be related to the Rio Tinto case. Australia seems to have temporarily suspended its exports of spot market iron-ore to China. Data from the shipping company AXSMarine indicates that orders for shipments to China from Australia’s main iron-ore port fell to 12 this month, while orders for shipments from Brazil reached the record high of 31. This means that China’s demand for iron ore is still strong.”

so basically VALE is picking up the slack & would also seem to be enjoying it too, if this piece from Reuters is anything to go by :

Vale Resists China Price Cut Request on Demand Gain

“Politically Vale has done well with its customers by letting the Australians settle first,” Cliff said. In the first quarter, China took 66.5 percent of Vale’s total iron-ore sales of 52.1 million metric tons, up from 32 percent a year earlier.”

Regular readers of MyStockVoice will know that I’m a big fan of Vale, so, long VALE is a no brainer & I have felt that BHP is a little toppy for a week or so, may instigate a short. RTP I’ll leave for bigger fish to swim with.

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