How Have Latin America’s Most Valuable Listed Companies Fared Since 2012?

The highest-value listed companies in the region include both large corporations and unicorns, and we look at their performance over the last decade

Brazil and Mexico dominate the list of countries where the top 15 most valuable companies in the region are located, while one from Argentina and one from Colombia complete the list.
April 26, 2022 | 05:30 PM

Bloomberg Línea — From the mighty AB InBev (ABEV3) to the leadership of MercadoLibre (MELI) and the current rebound of commodities companies, the ranking of the most valuable publicly listed companies in Latin America highlights the strength of Brazil, the region’s largest economy, amid the emergence of unicorns that are making financial sector giants tremble in their shoes.

Bloomberg Línea has reviewed the performance of the 15 most valuable Latin American listed companies, to analyze their performance since 2012.

Although historically there were companies such as Grupo Modelo, which today has been absorbed by AB InBev, or the financial company Cielo, which was also once one of the 15 most valuable companies, they are not currently on the list. But, in contrast, Nubank (NU), which had already achieved an astronomical valuation after several rounds of financing, joined the list of the most-valuable public companies following its IPO in December 2021.

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On the other hand, as of the close of the market on April 25, Brazilian energy giant Petrobras (PETR4) is currently the most valuable company in Latin America, in close competition with its compatriot Vale (VALE3).

Brazil and Mexico practically dominate the top 15 of the region’s most valuable public companies, with one company from Argentina and one from Colombia completing the list.

The Recovery of Commodities

The behavior of the two largest companies in the region confirms the recovery of commodities prices, which after the oil crisis in 2015, followed by the collapse during the pandemic, have now seen their prices rise dramatically.

The prices of everything from grains to oil have not only benefited from the pace of the reactivation of industry, but have risen as a result of Russia’s invasion of Ukraine.

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According to Bloomberg calculations, Petrobras shares have returned 30.41% in dollar terms this year, even as the company has been targeted in the presidential debate ahead of October’s elections, amid criticism from both President Jair Bolsonaro and ex-president Lula da Silva, who is standing in a bid to unseat the former.

“Petrobras’ asset sale plans were derailed by Covid-19, but have moved full-steam ahead in 2021, allowing the company to reduce its debt,” according to a Bloomberg Intelligence note.

(Although there are 14 companies listed at the beginning of the rolling graphic, Nubank’s IPO in December 2021 brought the number to 15)

Vale’s stock, on the other hand, has so far this year seen returns measured in dollars of 17.51%.

The company is the world’s largest producer of iron ore and nickel at a time when prices have been rising steadily due to the disruption in global supply as a result of the Russian invasion of Ukraine.

According to an analysis by Fitch Ratings, not only is cash flow expected to increase in the Latin American mining sector, but there will be a benefit for high-quality iron ore producers, such as Vale.

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The Mexican Presence

In line with the size of its economy, Mexico also stands out on the ranking as home to some of the most valuable publicly listed companies in Latin America, and its presence reaffirms the size of the economy with the second-largest GDP in the region. América Móvil (AMXL), Latin America’s leading telecommunications company, has traditionally been among the higher places on the list, and currently sits at No. 3.

The company’s current strength is so auspicious that, together with other companies owned by magnate Carlos Slim, it consolidated its position as one of the best performers in the Mexican stock market during March. The performance of the companies during this period was related to their exposure to the U.S., in addition to presenting attractive valuations, Carlos González, director of economic and financial analysis at Monex, told Bloomberg Línea.

The company’s performance, in addition, rides the momentum it gathered last year, closing 2021 with an annual profit that quadrupled that of 2020, a year marked by the outbreak of the pandemic.

The top 5 is closed by Walmart de Mexico (WALMEX*) and Southern Copper Corporation (SCCO), the latter with operations in both Mexico and Peru. Walmex’s position reflects the good year it has been having, to the point that a month ago it announced that its investments will increase by 35% this year compared to 2021.

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Shoppers at Walmart during the 'Buen Fin' discount weekend.dfd

Southern Copper Corporation, owned by Grupo México, is one of the world’s largest copper producers, and the mineral’s prices have also benefited from effects of the war in Ukraine on raw materials. This year, copper prices once again surpassed $10,000 per ton on the London Metal Exchange.

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As a result, the company’s performance this year is bettering that of last year as, according to Matías Rivera Castro, an analyst at Inteligo, “copper corresponds to 89% of the company’s total production, in addition to the increases in the prices of molybdenum and zinc, which correspond to 3% and 6% of the company’s total production respectively”.

In the Land of Unicorns

But the list has not only evidenced the power of commodities, but also the expansion of unicorns in Latin America, which is fertile ground for the birth of companies valued at more than $1 billion.

The best example has been MercadoLibre, which not only paved the way for other companies in the region, but at certain times, taking advantage of the e-commerce boom during the pandemic, became the most valuable company in Latin America.

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Although the company’s stock trading in the United States has fallen more than 20% this year, on a par with the poor performance of technology companies in that country due to the risk of an imminent tightening of the Federal Reserve’s monetary policy, MercadoLibre’s rise has been sustained since 2012, rising from a value of around $4 billion to more than $50 billion, an increase similar to that of automotive industry giants such as BMW.

And talking of unicorns, we cannot fail to mention Nubank, which not only became one of the largest banks in Brazil, but also became one of the most valuable banks in Latin America after debuting on the New York Stock Exchange in December.

And its prospects may be even better next year. According to Diksha Gera, a banking analyst at Bloomberg Intelligence, “Nubank could report an unadjusted profit of around $260 million in 2023 as it expands in Brazil, Mexico and Colombia, after a potential loss of $330 million in 2022 driven by higher provisioning and operating expenses”.

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The company, co-founded by Colombian David Vélez, American Edward Wible, and Brazilian Cristina Junqueira, has a market value of over $30 billion, which, although lower than it has been, allows it to rank as the 12th most valuable company in the region.

Translated from the Spanish by Adam Critchley