Continues to set records and surprises profitability
3Q22 results posted solid increases, with better-than-expected margins due to positive performance in Concessions, partially offset by weakness in Plants
Vehicular traffic showed solid progress and EBITDA for the quarter was record. We reiterate our Buy recommendation, but without a clear catalyst that could boost the stock price
Higher growth and contribution from Concessions supports progress, while Plants continued to be weak. In 3Q22, Pinfra reported a year-on-year increase in revenues of 11.2% to MXN 3.55 billion, in line with estimates, due to a greater dynamism in vehicle traffic, the integration of the Aguascalientes Bypass and the Nabor-Carrillo section (Piramides-Texcoco). As a result, traffic on concessioned highways rose 12% y/y, supporting the 21.6% y/y increase in Concessions, which also benefited from the favorable performance of IPM. In contrast, there were annual declines in Construction of 32.8%, due to a lower volume of work executed, and in Plants of 38.3%, due to a lower volume of work released by the CDMX government. In turn, EBITDA rose 18.4% y/y to MXN 2.49 billion (new record), and therefore, the margin expanded by 4.2pp to 70.1%, beating expectations. By segment, the increase in Concessions was 20.1% and in Construction 2.3%, while Plants fell 64.3%. Finally, majority net income increased 9.0% y/y due to operating performance, partially offset by lower foreign exchange gains. We highlight the healthy financial balance with a ND/EBITDA of -1.0x. Fundamentals remain strong, but without near-term catalysts. The solid report reaffirms the outlook for sustained 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 5.9x FV/EBITDA vs. 7.7x of the sector.