Equity Analysis /
Mexico

ASUR: Quarterly Report 3Q22: Continues to be our favorite in the industry

  • Asur’s results showed strong growth, in line with expectations, which we believe should be well received by the market

  • Despite the challenges, the outlook remains positive, with solid demand and operating efficiencies

  • Stands out for having the most attractive valuation in the sector, thus reaffirming its position in our top-picks

Jose Itzamna Espitia Hernandez
Jose Itzamna Espitia Hernandez

Senior Equity Research Analyst, Infrastructure, Materials and Transportation

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Banorte
25 October 2022
Published byBanorte

Continues to be our favorite in the industry

  • Asur’s results showed strong growth, in line with expectations, which we believe should be well received by the market, thus reaffirming its position in our top-picks

  • Despite the challenges, the outlook remains positive, with solid demand and operating efficiencies. Stands out for having the most attractive valuation in the sector (9.7x vs. 10.9x average)

Demand has exceeded expectations, higher tariffs and cost control driving growth. Asur reported significant annual increases, derived from positive traffic performance, also supported by higher maximum tariffs. Total passengers increased 24.5% y/y, while operating revenues (sum of aeronautical and non-aeronautical) rose 35.6% y/y to MXN 5.84 billion, in line with our estimates. Operating leverage coupled with efficiencies in Mexico and Colombia, which offset higher expenses in Puerto Rico, reflected an EBITDA increase of 39.6% y/y to MXN 4.07 billion, with EBITDA margin expansion (excluding construction services) of 200bps to 69.7%, in line with our estimates (69.9%e). In turn, majority net income grew 41.9% to MXN 2.55 billion, driven by operating performance, partially offset by an increase in financial costs (+225%) due to higher interest paid and lower FX gains, as well as higher taxes (+50%). The most attractive in the sector. Although we will be monitoring the evolution of demand in the difficult backdrop, we believe that demand will be defensive despite the lower economic activity. We also highlight the solid results that confirm our favorable growth outlook, highlighting the healthy balance sheet (ND/EBITDA of 0.1x). Factoring in the figures, the FV/EBITDA multiple decreased from 10.7x to 9.7x, reflecting an attractive valuation vs. a 10.9x average for the domestic sector; therefore, we reiterate our BUY recommendation.