Investing in Mexico: The Homebuilder s Perspective Home Builder = Nation Builder. February 10 th, 2011 February 14 th, 2011

Transcription

1 Investing in Mexico: The Homebuilder s Perspective Home Builder = Nation Builder Luis Orvañanos Germán Ahumada February 10 th, 2011 February 14 th, 2011 New York London

2 New houses will grow by at least 7 million units Mortgage portfolios will grow five fold (USD 52.6 billion) Towards 2020 Average household income will grow by 40% USD 17.6 k Cities with 1 million population will grow by 6 (15 cities total)

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4 Home Builders = Nation Builders I II III Why Invest in Mexico Why Invest in the Housing Sector Housing Demand The Mexican Mortgage Public Policies support Housing Supply Mexico s Listed Homebuilders

5 Home Builders = Nation Builders I II III Why Invest in Mexico Why Invest in the Housing Sector Housing Demand The Mexican Mortgage Public Policies support Housing Supply Mexico s Listed Homebuilders

6 Why Invest in Mexico Mexico s democracy fosters human rights, free trade and environmental protection conducive to sustained development Stable economic and political environment encourages foreign investment Mexican economy has been remarkably resilient to economic downturn over the past decade and is back on the road to growth

7 Mexico has a Low Country Risk Exposure 6500 Country Risk EMBI Argentina Brazil Mexico Jan 31 AT Kearney ranked Mexico as the 8th most attractive destination for FDI; an 11 position improvement over the last three years

8 Home Builders = Nation Builders I II III Why Invest in Mexico Why Invest in the Housing Sector Housing Demand The Mexican Mortgage Public Policies support Housing Supply Mexico s Listed Homebuilders

9 Why Invest in the Housing Sector Housing Demand The Mexican Mortgage Public Policies Support Housing Supply

10 Why Invest in the Housing Sector Housing Demand The Mexican Mortgage Public Policies Support Housing is a constitutional right Demographic Bonus: 112 million Millions of potential clients a huge housing deficit with additional 600 thousand households every year Growing mortgage market Unlimited opportunity to tap an underserved market Housing Supply There is solid housing demand

11 Mexico s Population will Plateau by ,000,000 Population 120,000, ,000, ,000, ,000, ,000,000 95,000,000 90,000, births per mother in 1960 vs. two in 2010

12 1,200,000 A Strong and Growing Mortgage System Mortgages Origination from Key Institutions: ,000,000 FONHAPO 800,000 Banks 600, ,000 Non SHF Sofol Bursas + HN SHF 200,000 FOVISSSTE e 2011e Source: Softec 2011 Jan 31 Infonavit

13 Why Invest in the Housing Sector Housing Demand The Mexican Mortgage Stable rates and non toxic structures protect consumer economy Public-Private Co-Financing mortgage access Strategic Reforms Public Policies Support Housing Supply MBS Sound Mortgage Structure Resulting from a Consolidated Framework: Provide certainty and availability of mortgages in the future

14 Why Invest in the Housing Sector Housing Demand There is a public private coordination and consensus on State Housing Policy Economic Social Environmental The Mexican Mortgage Public Policies Support Access to funding and economic support for lowincome families through housing subsidies Housing industry benefits Mexico through positive health and education spillover effects Middle class formation Encourages the construction of environmentally sustainable communities Housing Supply Significant Economic, Social and Environmental Impact on Consumers

15 Why Invest in the Housing Sector Housing Demand The Mexican Mortgage Public Policies Support Housing Supply Consolidation in the industry; large players prevailed in a difficult environment Opportunities to increase market share Supply capabilities able to address the market Homebuilders market share benefits from a lack of competition in the industry

16 Why Invest in the Housing Sector Housing Demand There is: The Mexican Mortgage A solid long term demand A solid mortgage structure Public Policies Support Housing Supply Home Builders Continuous support from Public Policies = Nation Builders A professionally driven housing supply

17 New homes grew by 7 million units Mortgage portfolios doubled (USD 9.72 billion) Average household income increased 78% (USD 12.5 k) The Housing Miracle Decade Cities with 1 million population grew by 3 (10 cities total)

18 The housing industry is the engine for progress supporting the development of sustainable communities and cities The housing industry is a well organized sector lead by professional management teams

19 Home Builders = Nation Builders I II III Why Invest in Mexico Why Invest in the Housing Sector Housing Demand The Mexican Mortgage Public Policies support Housing Supply Mexico s Listed Homebuilders

20 Why Invest in Mexican Homebuilders? Listed Homebuilders (LHB): Market supported by world class public and private housing institutions - mortgage availability to all segments continue to gain market share: over 40% of new homes (volume) continuous revenue growth, have abandoned percentage of completion accounting method attractive returns on invested capital (ROIC) and equity (ROE)

21 LHBs Growing Market Share 50% 30% 10% -10% Number of Mortgages & LHBs Market Share 24.9% 22.2% 16.3% 17.6% 14.9% LHB s Market Share 25.8% 27.5% 48.6% Subprime crisis 42.3% 38.9% 33.0% 35.3% E Opportunity to Continue Growing Market Share 1,400,000 1,300,000 1,200,000 Mortgages 1,100,000 1,000, , , , , , , , , ,000 0

22 Continuous Revenue Growth MILLION PESOS 160, , , , , , ,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Market Capitalization and Revenue Trend Listed HomebuildersMarket Cap 55,124 55,124 36, , ,785 37,925 91,609 90,170 90,170 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q * Under INIF-14 accounting rule Source: Economática 48,121 LTM Revenues 56,868 Subprime crisis 54,678 61, ,570

23 Why Invest in Mexican Homebuilders? Listed Homebuilders (LHB): best corporate governance practices; ethical business practices and committed to environmental and social responsibility superior execution capabilities in place to meet a growing market economies of scale increasing production efficiencies new construction technologies improving working capital cycle geographical diversification reaching larger markets.expansion strategies into local / international markets access to working capital in local and international markets

24 Why Invest in the Housing Sector In a Nutshell Mexico and its housing sector are linked and working in the right direction Mexico represents a safe and profitable investment Mexico s housing sector is a national priority Mexico s Listed Homebuilders are proven players in building the future Mexico will have millions of buyers and mortgages in decades to come FUTURE

25 Why Invest in the Housing Sector Mexico s Listed Homebuilders will invest almost 40 billion dollars over the next decade, providing 1.7 million new homes