Equity Analysis /
Mexico

Grupo Aeroportuario Centro Norte: Quarterly Report 2Q22: Surprising higher profitability

  • Oma reported a larger-than-expected margin expansion, due to better passenger demand and operating efficiencies

  • The results reaffirm the positive outlook for the company with better profitability despite the current challenges

  • The FV/EBITDA multiple falls from 10.2x to 9.7x vs. 10.0 national sector avg., so we reiterate our Buy recommendation

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

Surprising higher profitability

  • Oma recorded significant 2Q22 increases, boosted by better passenger demand and efficiencies that reflected a larger-than-expected margin expansion

  • The results should be well received by the market, as they reaffirm the positive outlook, with better profitability, which is remarkable in current’s challenging environment

Passengers very close to pre-pandemic levels, highlights the margins expansion. Oma's results continued with important advances due to better passenger performance and a still low comparative base. As a result, total traffic showed an annual growth of 29.6% y/y (-1.3% vs 2Q19), which together with higher tariffs approved in the Master Development Program and solid diversification activities performance (+43.4% y/y), led to an increase in the sum of aeronautical and non-aeronautical revenues of 34.8% y/y to MXN 2.4 billion, in line with estimates. On the other hand, higher operating leverage and costs and expenses control, resulted in a greater increase in Adjusted EBITDA of 40.1% to MXN $1.8 billion, placing the margin at 77.7% (+2.9pp), exceeding our 74.7% expectation. Finally, majority net income grew 49.1% y/y to MXN 925 million, supported by operating performance, higher interest income and a favorable foreign exchange effect, partially offset by higher interest costs (additional debt) and taxes. We highlight the financial strength with an Adjusted ND/EBITDA of 1.2x. Favorable outlook is confirmed with the solid report. We reaffirm our group expectations that aim to continuous growth, despite the environment challenges, and highlight the continued cheapening in valuation, as with the quarter’s figures the FV/EBITDA multiple dropped from 10.2x to 9.7x vs. 10.0x national sector average. We reiterate our Buy recommendation.