Earnings Report /
Mexico

Grupo Aeroportuario Centro Norte: Quarterly Report 1Q22: Recovery continues, with an attractive valuation

  • The group´s 1Q22´s figures showed advances, in line with expectations, driven by solid demand

  • In the same way, higher operating leverage, and costs control, resulted in profitability expansion

  • OMA’s outlook is positive and given the recent adjustment in the share price and 1Q22 figures

Jose Itzamna Espitia Hernandez
Jose Itzamna Espitia Hernandez

Senior Equity Research Analyst, Infrastructure, Materials and Transportation

Banorte
9 May 2022
Published by

Recovery continues, with an attractive valuation

  • Oma showed solid growth, in line with expectations, driven by passenger demand improvement and efficiencies that reflected profitability expansion

  • Group’s outlook is positive and given the recent adjustment in the share price and the advances in the results, the valuation looks attractive, so we raised our recommendation to Buy

Recovery keeps on going, highlighting higher margins. Oma's recorded significant increases in 1Q22 due to a better passenger dynamism and a still low comparative base ─although a little more normalized.  As a result, total traffic showed a 52.2% y/y growth  (-10.0% vs 1Q19), which in addition with higher rates approved in the Master Development Program and a better diversification activities performance (+38.0 % y/y), led to an increase in the sum of aeronautical and non-aeronautical revenues of 57.5% y/y to MXN 1.874 billion (+7.1% vs. 1Q19), in line with our estimates. On the other hand, higher operating leverage, and costs and expenses control, resulted in an increase in Adjusted EBITDA of 74.4% to MXN 1.409 billion (+11.0% vs. 1Q19), placing the margin at 75.2% (+7.3pp), above our projection of 72.6%. Majority net income rose 80.3% y/y to MXN 748 million, driven by operating performance, partially offset by higher interest costs (additional debt) and taxes. We highlight the financial strength ND/EBITDA of 1.0x. Favorable quarter confirms positive outlook. Considering the recent adjustments in the stock price and our positive expectations for the group, we raised our recommendation for Oma to Buy. This, given a valuation that looks attractive, due to the quarter’s figures where there was a reduction in the FV/EBITDA Adjusted multiple of 11.1x to 10.6x, compared to the average of 5 years before the pandemic (12.2x)