Signum Perspectives
Grupo Rotoplas, S.A.B. de C.V
Background
On Monday, May 6th, Grupo Rotoplas (ticker symbol: AGUA*) held AGUA EVENT for investors, suppliers and analysts. During the event, management announced first quarter results as well as the group’s main strategies in the face of a challenging 2019 environment.
Management said the company is seeking to expand its solutions portfolio in response to current needs in each region. They plan on introducing the water catchment solution in all of their regions as well as analyze the entry of water heating in Mexico, a solution that is already in place in Central America, Peru and Argentina.
A factor that took on relevance was the introduction of “bebbia,” a human water consumption access solution that is different to bottled water. This service can be accessed on-line through a domiciled credit card payment and includes a maintenance service every six months that guarantees the water is 100% safe, reliable and ready to drink. Management also said that the product would initially target the middle and middle-high income segments of the population. Later, depending on the results, they will evaluate extending its reach. They see a potential market of 27 million homes
in Mexico in this line of business.
The U.S. is also an important market for Rotoplas where they have developed an “e-commerce” platform that represents 10% of total water tank market sales. They also stressed that the company will continue to pursue business development strategies in this area.
Final Remarks
Although the company has an international presence, Mexico is still the biggest contributor to revenues and EBITDA. However, management expects this situation to change in the medium term; they are forecasting single-digit sales growth in Mexico in 2019 and double-digit growth in other regions.
The company’s plans to diversify its market in order to tackle the current economic situation are appropriate, in our view, and we will be paying close attention to the group’s strategies and macroeconomic conditions with a view to making pertinent recommendations.