Equity Analysis /
Mexico

Promotora y Operadora de Infraestructura: Quarterly Report 2Q22: Exceeds pre-pandemic traffic and with record EBITDA

  • Pinfra registered solid growth supported by Concessions but this was partially offset by Plants and Construction

  • Vehicular traffic exceeded pre-pandemic figures and EBITDA for the quarter was a record

  • We reiterate our Buy recommendation, although we do not see a short-term catalyst to drive the stock price

Jose Itzamna Espitia Hernandez
Jose Itzamna Espitia Hernandez

Senior Equity Research Analyst, Infrastructure, Materials and Transportation

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Banorte
4 August 2022
Published byBanorte

Exceeds pre-pandemic traffic and with record EBITDA

  • In 2Q22, Concession’s segment continued to be the main driver of Pinfra's results, managing to compensate for the strong weakness in Construction and Plants

  • Vehicular traffic exceeded pre-pandemic figures and EBITDA for the quarter was a record. While we reiterate our Buy recommendation, we do not see a short-term catalyst to drive the stock price

Concessions’ growth partially offset by Construction and Plants weaknesses.  The company showed an increase in revenue of 16.7% to MXN 3.5 billion, derived from a traffic recovery, the integration of the Aguascalientes Bypass and the Nabor-Carrillo section (Piramides-Texcoco), as well as a still easy comparative base.  Thus, traffic on concessioned highways had a rise of 14% y/y, (+3% vs. 2Q19 on a comparable basis), driving the Concessions adavance of 23.8% y/y, also supported by the solid IPM performance. In turn, it registered annual declines, 4.3% in Construction, due to a lower work volume executed, and 58.7% in Plants, by lower work volume released to the CDMX government.  On the other hand, EBITDA rose 13.5% y/y to MXN 2.4 billion (new record), in line with expectations, and therefore, the margin was reduced by 1.9pp to 66.8%. By segment, Concessions grew 22.5%, while Plants fell 73.7% and Construction presented a negative amount of MXN 11 million.  Finally, the increase in majority net income of 34.6% y/y benefited from higher interest income and a less adverse exchange rate effect. We highlight the healthy financial balance with a ND/EBITDA of -1.1x.  Solid fundamentals, but lack of catalysts in the short-term. Quarter's figures underpin continued growth and higher expected cash flow generation; however, we believe there are no catalysts in the near term that could give a further stock price boost, except for the current valuation of 6.3x FV/EBITDA vs. 8.0x of the sector.