Equity Analysis /
Mexico

Promotora y Operadora de Infraestructura: Quarterly Report 3Q22: Continues to set records and surprises profitability

  • 3Q22 figures posted solid increases, with better-than-expected margins due to positive performance in Concessions

  • Vehicular traffic showed solid progress and EBITDA for the quarter was record

  • Fundamentals remain strong, but we do not see a short-term catalyst that could boost the stock price

Jose Itzamna Espitia Hernandez
Jose Itzamna Espitia Hernandez

Senior Equity Research Analyst, Infrastructure, Materials and Transportation

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Banorte
26 October 2022
Published byBanorte

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.