Grupo Traxión S.A.B. de C.V.

Highlights:

• Arrowhead is updating its coverage on Grupo Traxión S.A.B. de C.V. (“Traxion” or “the Group”) with a fair value bracket of MXN 43.6 – MXN 53.3 (Share Price on December 5, 2022: MXN 28.8) based on Discounted Cash Flow Valuation and Comparable Company Valuation.
• Grupo Traxión is a Mexico-based diversified transportation and logistics business with interests across freight, 3/4PL, personnel transportation, and last-mile logistics. It is the only publicly traded, institutional company in Mexico’s Transportation and Logistics sector, which is central to the efficient functioning of Mexico’s thriving Outsourced Manufacturing and Services industry and has successfully leveraged its first-mover advantage.
• Traxion has followed an inorganic growth strategy with an aim of becoming a one-stop-solution for logistics and transportation needs. The Group has made several acquisitions since 2011 to bring more services under the Traxion umbrella and benefit from developments in its client industries, such as the evolution of e-commerce in Mexico and the realignment of global supply chains. Some of the major brands the Group has brought under the Traxion banner through acquisitions include Grupo Mudancero, Autotransportes El Bisonte, AFN, Grupo SID, Redpack, and LIPU. Its most recent acquisitions include, MEDISTIK and V-MODAL, which it acquired in August and September, 2022, respectively.
• Traxion has been consistent with its objective of transitioning into an asset-light business and is also working on lowering its fixed asset base by partnering more with third parties for its warehousing, personnel transportation, cargo, and last-mile operations. As this transition accelerates, we see the Group’s investments in hard assets declining and being replaced by higher investments in technology assets, which the Group may develop internally or acquire inorganically.
• Traxion is better placed than most of its domestic competitors to leverage Mexico’s geo-economic advantage, which has got enhanced due to the USMCA, the US-China trade wars, and the post-Covid supply chain diversification. Thanks to these developments, Mexico has outpaced China as the US’s largest trading partner and has become the preferred outsourcing location for the US and Canadian companies.

Highlights:

• Consolidated revenue totaled Ps. 5,373 million during the quarter, an increase of 24.3% compared to 3Q21
• The logistics and technology segment recorded a 29.0% growth mainly due to an increase in logistics services volume and progress made with technological applications.
• General expenses recorded a 61-basis point improvement, as a percentage of revenues, compared to 3Q21
• Consolidated EBITDA totaled Ps. 934 million during the quarter, a 3.5% increase compared to the same period of 2021
• EBITDA margin was 17.4%
• Net income reached Ps. 153 million in 3Q22
• Net operating cash flow totaled Ps. 747 million, a 40.7% increase compared to 3Q21
• CapEx totaled to Ps. 793 million in 3Q22
• Net Debt to EBITDA ratio was 2.29x at the end of 3Q22
• The fleet had an average of 9,652 total power units in operation during 3Q22
• During 3Q22, TRAXIÓN announced the acquisition of Medistik and V-MODAL
• Regarding ESG, TRAXIÓN began trials with “Zero Emissions” electric vehicles on select last-mile routes. Likewise, it published its Diversity and Inclusion Policy in July

Highlights:

• Date: Tuesday, October 25, 2022
• Time: 11:00am New York (10:00 am Mexico City)
• Dial-in: International: +1 (973) 528 0016, Within the US: +1 (877) 545 0523, Passcode: 103425

Highlights:

• Grupo Traxión, S.A.B. de C.V. announces that it has acquired V-MODAL, one of the most important intermodal marketing companies for rail services in Mexico, with more than 12 years of leadership
• The transaction price was Ps. 102.5 million for 90% of the company, of which Ps. 62.5 million were paid in cash and the rest with TRAXION shares of stock
• TRAXIÓN expects to grow significantly V-MODAL’s revenue base, mainly through cross-selling with current clients and optimize their supply chain expenses
• With this acquisition, TRAXIÓN significantly strengthens its presence in the rail segment

Highlights

• Grupo Traxión, S.A.B. de C.V. announces that it has obtained all regulatory approvals, and today successfully closed the acquisition process of MEDISTIK, one of the most important 4PL companies of healthcare products logistics solutions, mainly medicines and medical accessories, through an asset light approach
• The transaction price was Ps. 1,557 million in cash. For 2022, MEDITIK considers revenues for approximately Ps. 625 million pesos
• Once incorporated to the TRAXIÓN platform, and with all planned synergies realized, EBITDA margin is expected to be over 35%
• With this acquisition, TRAXIÓN integrates the pharma vertical to its 4PL and last-mile logistics services, in addition to retail and e-commerce

• Arrowhead is updating its coverage on Grupo Traxión S.A.B. de C.V. (“Traxion” or “the Group”) with a fair value bracket of MXN 51.6 – MXN 63.1 (Share Price on August 22, 2022: MXN 21.7) based on Discounted Cash Flow Valuation and Comparable Company Valuation
• Grupo Traxión is a Mexico-based diversified transportation and logistics business with interests across freight, 3/4PL, personnel transportation, and last-mile logistics. It is the only publicly traded, institutional company in Mexico’s Transportation and Logistics sector, which is central to the efficient functioning of Mexico’s thriving Outsourced Manufacturing and Services industry and has successfully leveraged its first-mover advantage
• Traxion has followed an inorganic growth strategy with an aim of becoming a one-stop-solution for logistics and transportation needs. The Group has made several acquisitions since 2011 to bring more services under the Traxion umbrella and benefit from developments in its client industries, such as the evolution of e-commerce in Mexico and the realignment of global supply chains. Some of the major brands the Group has brought under the Traxion banner through acquisitions include Grupo Mudancero, Autotransportes El Bisonte, AFN, Grupo SID, Redpack, and LIPU. In March 2022, Traxion signed an agreement to acquire MEDISTIK, a 4PL company that provides logistics solutions for medicine and medical accessories
• Traxion has been consistent with its objective of transitioning into an asset-light business and is also working on lowering its fixed asset base by partnering more with third parties for its warehousing, personnel transportation, cargo, and last-mile operations. As this transition accelerates, we see the Group’s investments in hard assets declining and being replaced by higher investments in technology assets, which the Group may develop internally or acquire inorganically
• Traxion is better placed than most of its domestic competitors to leverage Mexico’s geo-economic advantage, which has got enhanced due to the USMCA, the US-China trade wars, and the post-Covid supply chain diversification. Thanks to these developments, Mexico has outpaced China as the US’s largest trading partner and has become the preferred outsourcing location for the US and Canadian companies