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Gafisa S.A. Message Board

  • the_entitled the_entitled Dec 10, 2012 9:55 AM Flag

    OT HXM

    I know Brazil is less than 5% of their revs. But they low balled guidance a day too soon (they did it right before the Brazilian Constriction Stimulus announcement) I don't own it but I suspect their Brazilian homes sales will be enough to beat earnings next time, so $11 looks like a nice entry point. IMHO Do your DD.

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    • INFONAVIT announced their projected credit growth for 2013 yesterday - flat vs. 2012. This is negative for the industry and low & middle income segments. Most think EPN is going to focus on energy and infrastructure versus housing.

    • HXM is a well run, solid company. They are gaining traction in infrastructure and have done a good job increasing focus in the upper middle segment. The main headwind as I see it, is low income margins have gotten so low that it's killed the industry and instead of providing some economies of scale for the big builders, it is now really a nuisance and creates little shareholder value. Mexico's low income housing program is very problematic in many ways and still lacks a reliable, cost effective bridge financing market, whereas Brazil's CAIXA is very constructive for the builder industry. Bottom line: HXM is probably safe but don't expect a lot of upside. For this reason I think ICA unloaded their residential building business to Javer last week.

    • I did some DD. Doesn't look good on a fundamental level. Price-wise, every time HXM has hit $11 it has bounced, but after reading the Credit Suisse downgrade on the Mexican homebuilders - I think I'll pass. It is interesting to me that an American homebuilder that I am invested in - KBH - specializing in CA and TC residential building - does the exact opposite of the CS downgrade of the Mexican builders. It establishes micro-communities (25-100 residences) in the most valuable geographically-constrained residential markets in Coastal CA and TX.

 
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