CNRFF - Consorcio ARA: A Deeply Undervalued Mexican Homebuilder
Investment Thesis
Consorcio ARA (CNRFF) is one of the largest homebuilders in Mexico. Despite a healthy financial position, consistent profitability, stable growth, and conservative management, the market values the company at 0.39 times book value, 0.24 times the value of its land bank and inventory (held on the balance sheet at cost).
Due to the highly politicized nature of the housing market, the recent housing boom and bust, 2018 growth underperformance, and the large investment in land bank relative to peers, the attractive opportunity has appeared with 161% upside from ARA's current share price of