Accelerated recovery and EBITDA record
1Q22 results showed significant advances, exceeding our expectations due to Concessions recovery, although with lower profitability given the weak performance in Plants
Traffic on toll roads close to pre-pandemic levels and the quarter’s EBITDA was at record high, which coupled with the outstanding financial strength, confirms our positive outlook for the company
Growth in Concessions and Construction partially offset by fall in Plants. During 1Q22, the company presented a revenue increase of 30.8% y/y to MXN 3.575 billion, as a result of a better traffic performance –although with some impact in January and February due to COVID-19– and a still easy comparative base. In this way, traffic on concessioned highways rose 20% y/y, (-3.9% vs. 1Q19 with comparable base), thus driving the increase in Concessions of 25.7% y/y, also supported by IPM’s positive performance. Construction registered an annual increase of 71.4% resulting from a higher volume of work executed, while Plants fell 24.8% due to a lower work volume released by the CDMX’s government. On the other hand, EBITDA grew 29.8% y/y to MXN 2.3 billion (a new quarter record), better than expected, and therefore, the margin was reduced by 0.5pp to 64.3%. By segment, annual increases were 30.9% in Concessions, 73.8% in Construction, while Plants decreased 75.6%. Finally, majority net income fell 14.2% y/y due to an adverse exchange rate effect and higher financial costs. We highlight the healthy financial balance with a ND/EBITDA of -1.3x. The outlook is positive and the valuation attractive. The solid report, supported by a more dynamic recovery, underpins solid growth and expected higher cash flow generation. Incorporating the figures, the multiple was reduced from 7.0x to 6.6x, which looks very attractive vs. 9.4x average L2y pre-pandemic. Hence we reiterate our Buy recommendation.
