Alpek SAB de CV

Income statement

Sources: 4Q22, 4Q23, 4Q24, 4Q25 Earnings Reports; FS 2025; FY2021–22 peso gross profit from Investing.com's statement summary (aggregator, flagged). Dividends per share are not stated in the sources reviewed; on roughly 2,107 million shares the declared amounts imply about MXN 1.36 (FY2023) and MXN 1.25 (FY2024) per share [derived].

Margins and growth [derived]

Revenue CAGR FY2021–FY2025 in US$: about -3.8% [derived].

Balance sheet

Net debt includes lease liabilities (IFRS 16); the short/long debt lines exclude them, which is why they do not sum to net debt plus cash. Sources: 4Q22–4Q25 reports; April 2026 presentation appendix. The same presentation's chart shows a US$1,185M figure against an inconsistently labelled first year; the 4Q22 report's US$1,225M is used for FY2021.

Cash flow

FY2022 CAPEX includes the Octal acquisition. FY2023 CAPEX is US$277M in the 4Q23 report; a US$227M figure is printed in the April 2026 presentation chart — both noted. Alpek reported FY2023 free cash flow of US$408M at the time on a different definition from today's "Operating Free Cash Flow". FY2025 dividends were paid only by subsidiaries to minority partners.

Ratios

Leverage and coverage are as reported; all other ratios are [derived] from peso statements. FY2025 cash conversion cycle: receivables about 29 days, inventory 72 days, payables 69 days.

Commentary

Revenue. The US$10.6 billion peak in 2022 reflected record feedstock prices, the Octal consolidation and exceptional margins. Since then revenue has fallen for three straight years, to US$6.6 billion, as paraxylene prices deflated, volumes slipped 14% from peak and footprint was closed. Revenue is a poor performance indicator here because pass-through pricing makes it track feedstock costs.

Profitability. The inflection was 2023. Chinese integrated PET margins fell from US$296/t in 2022 to US$187/t in 2023 and US$142/t in 2025 (April 2026 presentation), and North American PP margins collapsed from 34 cents per pound to 14. Gross margin halved. Reported EBITDA has been further depressed by inventory losses in falling raw-material markets and by restructuring: US$71 million of adjustments in 2025 alone.

Net income. The FY2023 loss of MXN 10.9 billion was dominated by MXN 11.1 billion of impairments, chiefly the US$557 million write-down of the Corpus Christi Polymers investment. FY2025's loss combined weak operations with a tax charge of MXN 1.9 billion on a small pre-tax loss (deferred tax asset reversals; the stated effective rate is a meaningless 560%).

Balance sheet. Net debt has been remarkably stable in a US$1.7–1.9 billion band for four years; the leverage ratio moved because EBITDA did. Equity has shrunk 43% from the 2022 peak through losses, dividends and currency translation. Working capital has been squeezed from US$1.17 billion to under US$0.6 billion, an important and partly one-off source of cash.

Cash flow. Despite losses, the business has stayed cash-positive after maintenance capex in every year, the core of management's "resilient cash generation" claim (a ten-year average of about US$370 million on its definition). 2024's dividend of roughly US$134 million to Alpek shareholders, paid in part to facilitate the ALFA spin-off, pushed net debt up; the 2025 suspension reversed that.

2026 inflection. 1H26 Reported EBITDA of US$569 million exceeded all of FY2025; LTM Reported EBITDA reached US$755 million and net debt fell to US$1,664 million (2Q26 Report). US$89 million of the 1H26 reported figure was inventory gain, and 2Q26 absorbed a US$211 million working-capital build that should partly reverse if prices ease.

Management guidance. FY2026 Comparable EBITDA US$750–800 million, volume 4.6 million tonnes, CAPEX US$150 million, Operating Free Cash Flow US$300–350 million. With US$486 million delivered in 1H26, guidance implies US$264–314 million in 2H26, or about US$130–155 million a quarter — close to 1Q26's US$150 million and well below 2Q26's US$336 million. Management is explicitly guiding to normalisation.

Consensus. Detailed consensus estimates were not available in the sources reviewed; the only datapoint is the average price target of about MXN 15.5, roughly in line with the current price.

Bull case

1. Earnings power has been reset upward by closures. Four uncompetitive sites have gone since 2023 while volume guidance rose to 4.6 million tonnes; the same margin now produces more EBITDA per tonne.

2. The balance sheet is being repaired at speed. Leverage fell from 4.4x to 2.2x in six months, and US$300–350 million of free cash flow plus asset sales could take net debt toward US$1.5 billion by year end, opening the door to rating stabilisation and dividends.

3. The stock is still cheap on normalised numbers: about 4.4x guided EBITDA with 100% free float, potential index inclusion and optionality from tariffs that guidance excludes.

Bear case

1. 2Q26 was a windfall, not a new base. Margins of US$307/t and freight of US$225/t were conflict-driven; the pre-conflict base case was US$145/t and US$75/t, which produced guidance of only US$450–500 million and leverage near 4x.

2. Structural oversupply is unresolved. Chinese capacity continues to set the marginal price, rationalisation is slow, and North American PP is absorbing new supply.

3. Reported earnings flatter the underlying picture. 1H26 included US$89 million of inventory gains, and LTM leverage will mechanically rise as strong quarters roll off unless net debt falls further.

Catalysts and monitorables (next 12 months). 3Q26 results around 20 October 2026 and whether quarterly Comparable EBITDA holds above US$150 million; Chinese integrated PET margin and Shanghai–South America freight; Phase II and III asset-sale announcements; rating-agency outlook changes; any dividend decision at the 2027 AGM; US tariff rulings on PET; progress and capex phasing on the PP extruder; a decision on Corpus Christi Polymers; peso level against the MXN 18.00 assumption; IPC index inclusion.

Analyst verdict. Alpek in October 2026 is a better company than its three-year record suggests and a less transformed one than its 2Q26 numbers imply. The evidence for the first claim is solid: through the deepest polyester downturn in a generation it never burned cash after maintenance capital, kept net debt in a narrow band, closed its weakest plants, refinanced its near-term maturities and completed a clean separation from ALFA. Plastics & Chemicals proved a genuine stabiliser. The evidence for the second claim is equally clear in management's own guidance: second-half earnings are expected to fall by roughly half from the second-quarter run rate as conflict-driven margins and freight recede. The base case management wrote in February — Comparable EBITDA of US$450–500 million — remains the best public estimate of trough-condition earnings, and at that level net debt of US$1.66 billion is still about 3.5 times EBITDA.

The decisive variable is therefore not the cycle, which nobody at Alpek controls, but what is done with the windfall. If 2026's US$300–350 million of free cash flow and asset-sale proceeds go to debt, Alpek could enter the next soft patch with net debt near US$1.4–1.5 billion, leverage below 3x even on trough earnings, and a credible path back toward investment grade. That would justify a higher multiple than the current 4–5x. If instead the dividend returns early or growth capex escalates, the equity will again be hostage to Chinese export pricing. Management's refusal to restore the dividend in July is the right signal. On balance the shares look fairly valued for a normalising second half and inexpensive for investors who believe deleveraging will be completed; the risk–reward is favourable but depends on discipline that has yet to be tested in an upturn.

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Verification gaps to close before external use: exact rating-action dates and current outlooks; top-ten shareholder register; FY2021–22 peso operating income, EPS and dividends per share; segment note country revenue; contingencies note; peer financials and multiples; Terza transaction terms; pre-2021 milestone dates and deal values.