Highlights:
· We expect BOLSAA to report 4Q09 EPS of MXN0.23 and net income of MXN139m (flat y/y; +5% q/q). Total revenues should reach MXN417m (+17% y/y; -6% q/q).
· We estimate that BMV will surpass management’s FY10 net income guidance of MXN624m by a small margin as cash payments to shareholders will cause interest income to be lower and the Peso´s appreciation will cause an FX loss. We also expects EBITDA margin to be 200 bps above the 43.8% guidance.
· Cash 1Q10 volumes were up +93% y/y. April ADTV is MXN10.4b, down -1% from 1Q10 and +61% y/y.
· Derivatives 1Q10 volumes were down -34% y/y. April ADV is 77k contracts, down -51% from 1Q10 and -59% y/y.
· BOLSAA is trading at 18.4x consensus 2011 earnings, a 37% premium to the domestic index (IPC).
BMV-CME routing agreement for the derivatives market
MexDer will broaden its distribution to CME’s 400k terminals around the world, this should boost volumes significantly.
· Price time Priority – Project RINO
RINO rules were published on 4-Feb and is expected a 6-month period implementation. RINO will allow DMA implementation and co-location on MexDer, attracting new participants, which should fuel volumes.
· Co-location agreements are expected to increase Cash volumes starting from 2H10 and Derivatives volumes from 1H11.
· Four clients signed co-location agreements on the cash market (two are expected to begin trading in March).
· BMV is continuing with its tech upgrades: The fix protocol was implemented on the cash market on 1Q10 allowing lower latencies and high scalability in throughputs; and the Central trading engine is moving on schedule and is expected by 2012.
· AFOREs (Pension Funds) are now allowed to invest in single stocks
The possibility for AFORES to deviate (+/- 4%) from the IPC has not, in our view, been fully reflected on the volumes yet.
· AFOREs can also increase their variable income investments by 7%, increasing ADV by 3.0% (see chart below).
Provided By: Equity Research Desk www.erdesk.com