Earnings Report /
Mexico

Grupo Aeroportuario del Pacifico: Quarterly Report 1Q22: Expense control surprises favorably

  • In 1Q22, company´s performance showed advances above expectations, due to a solid demand and costs efficiencies

  • The group continues to stand out in the sector with the highest EBITDA growth vs. pre-pandemic figures

  • GAP’s outlook is strengthened by 1Q22´s solid figures and the current valuation that seems attractive

Jose Itzamna Espitia Hernandez
Jose Itzamna Espitia Hernandez

Senior Equity Research Analyst, Infrastructure, Materials and Transportation

Banorte
9 May 2022
Published by

xpense control surprises favorably

  • Gap recorded significant progress and higher profitability, above our estimates, driven by passenger traffic improvement and expense control

  • The group continues to stand out in the sector with the highest EBITDA growth vs. pre-pandemic figures. We highlight the attractive valuation reduction after incorporating the quarter’s figures

Solid operating growth and margin expansion. In 1Q22 Gap showed a passenger traffic increase of 69.9% y/y (+5.8% vs. 1Q19), due to higher demand and a still low comparative base, although more normalized. This alongside with higher fares approved in the Master Development Programs, led to an annual increase in the sum of aeronautical and non-aeronautical revenues from 85.4% to MXN 5.022 billion (+42.2% vs. 1Q19), in line with our estimates. In turn, operating leverage lead to a higher EBITDA advance of 111.0% to MXN 3.708 billion, which was supported by a strict cost and expense control, therefore the respective margin, excluding accounting changes (without impacting the flow), rose 9.0pp, standing at 73.8%, exceeding our estimate of 69.0%. Finally, the group presented an increase in comprehensive income attributable to majority control of 70.4% y/y to MXN 2.222 billion, given better operating performance. After incorporating the results, the FV/EBITDA multiple registered an attractive reduction from 15.0x to 12.7x.

Favorable perspectives are strengthened. The company has stood out for showing a faster pace of recovery, which supports our 2022 solid growth expectations and profitability expansion. In this sense, and after the positive report, we will be updating our estimates with positive implications, highlighting the current valuation that seems attractive and compares favorably vs. the pre-pandemic 5-year average of 14.9x.