Equity Analysis /
Mexico

Grupo Aeroportuario del Pacifico: Quarterly Report 3Q22: Growth highlights in the current backdrop

  • In 3Q22, Gap showed significant year-over-year advances, in line with expectations, due to higher passenger traffic

  • Despite slight pressure on profitability, EBITDA margin remained within the company's guidance

  • Although 3Q22 could be well received by the market, we believe much of the outlook is already reflected in valuation

Jose Itzamna Espitia Hernandez
Jose Itzamna Espitia Hernandez

Senior Equity Research Analyst, Infrastructure, Materials and Transportation

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Banorte
24 October 2022
Published byBanorte

Growth highlights in the current backdrop

  • Gap showed significant year-over-year advances, in line with expectations, due to higher passenger traffic. Despite slight pressure on profitability, margin remained within the company's guidance

  • Although the report could be well received by the market, given the reduction in FV/EBITDA from 11.4x to 10.7x, we believe that much of the outlook is already priced into the valuation

Double-digit growth, but with a slight decline in profitability. Gap showed 3Q22 passenger growth of 24.6% y/y, due to continued strong demand and a still easy comparable base. This, together with the adjustment to maximum tariffs for inflation, reflected a yearly increase in the sum of aeronautical and non-aeronautical revenues of 32.7% to MXN 5.78 billion, in line with our estimates. EBITDA grew 31.8% to MXN 4.09 billion, and the respective margin, excluding accounting changes (with no impact on EBITDA), declined 60bps to 70.7%, slightly below our expectations, due to higher increases in other operating expenses (+75%) and in rights on concession assets (+48%). It is worth mentioning that in the aggregate, the company kept discipline in costs and expenses, which allowed it to remain at levels similar to the guidance for the year of 71%±1%. Finally, the group recorded an annual growth in net income attributable to controlling interest of 31.9% to MXN 2.60 billion, due to operating performance and higher FX income. GAP will continue to grow in a complex backdrop. The results support our expectation of solid progress, which will be matched by higher profitability for the year for the group. In turn, we believe that in a recession scenario likely for 2023, the company would be one of those that would show a defensive performance. While the lower valuation is interesting, we must remember that it has been the most expensive company in the sector, which in our opinion limits the upside. Therefore, we reiterate our Hold recommendation.