BME:AENA - Aena

[Guest Own The Rails]

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[Spekulatius]

Thanks for the write up. I agree this looks promising. Yes, Brexit could be a short term headwind, since Spain is a very popular destination for the Brits (almost 30% of Aena’s passengers are from the UK), but I expect any dent in travel to be short lived. I put this on my watch list.

[fisch777]

Nice.  The IPO was pretty interesting here since underwriters wildly underpriced it and then their sell-side analysts (chinese wall, right?) stuck with sell/hold ratings for months/years to try to save face with government. 

 

Also GAAP is recent IPO (trades NASD) of Argentine operator with airport ownership in Brazil, Italy, etc.

[AJDelphi]

Nice.  The IPO was pretty interesting here since underwriters wildly underpriced it and then their sell-side analysts (chinese wall, right?) stuck with sell/hold ratings for months/years to try to save face with government. 

 

Also GAAP is recent IPO (trades NASD) of Argentine operator with airport ownership in Brazil, Italy, etc.

 

CAAP, Corporacion America Airports is the Argentine operator. Which I think is an interesting one. A lot more potential operating leverage there but have to deal with inflation in Argentina. Management has mentioned a lot of the fees are paid in USD, so maybe its not that big of a deal.

 

GAP is the western Mexico airports.

 

Nice work on Aena Own The Rails . It's one of the cheapest of the big publicly traded airport companies and traffic should continue to grow at good rates in Spain. The government ownership made me less worried about any issues with the concessions as well. Definitely something I'd be comfortable holding for a long time.

 

[IanBezek]

Have you looked at the Mexican airports? I own all three operators, big position in PAC. Mid teens revenue and EBITDA growth compounded for an extended length of time. They pay most of earnings out as dividends so large (and growing) yields as well. The stocks are generally cheaper than the European ones despite far higher growth due to political noise. Whenever Trump concerns or whatnot hit, they invariably drop 30% and you can buy at great values.

[wisborough]

Aena is a regulated company - and it looks like it is "over-earning" . Doesn't that imply an earnings re-base at some point ? and thus long term growth likely to be weak ?

[Spekulatius]

Aena is a regulated company - and it looks like it is "over-earning" . Doesn't that imply an earnings re-base at some point ? and thus long term growth likely to be weak ?

 

Why do you think it’s overearnin? According to some metrics like revenue per passenger, AENA is earning way less than European peers. Admittedly, the EBITDA margin is quite strong, but combined with above, it looks like this is more to low costs than to high revenue take.

[Guest Schwab711]

I like AENA but I think wisborough is right that they are over-earning somewhat. Until 2021, AENA has to move costs from the regulated airports operations to the free-market commercial operations, which will probably lower EBITDA margins. Contrasting that, Fraport is still increasing rates and only recently added a duty free segment, which should help margins.

 

There's also issues around employee compensation for both AENA and Fraport with lots of airport worker strikes over the last few months in both countries. Best I can tell, the wage pressure in the EU as a whole is pretty strong.

 

I have to keep thinking about AENA.