Author Topic: BME:AENA - Aena  (Read 378 times)

Own The Rails

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BME:AENA - Aena
« on: February 21, 2019, 11:41:54 AM »
I thought Id send over some thoughts on Aena, the Spanish airport authority. Given I had already written this up and don't want to deal with the mess of formatting properly for CoBF, you'll find a brief writeup attached. Im hoping to spend some time digging in a bit deeper here to understand the regulatory aspects of investing in government-controlled assets, as well as a few other nuances around the capex requirements going forward.

It currently trades at a 7.4% LTM FCF yield, and on top of that I think you could layer on 5% revenue growth (1.5% from passengers and 3.5% from commercial spend), 1% margin expansion, and 1% dividend growth to get to a low-teens IRR.

Would love to get any thoughts on this and will refer others to the recent threat that Schwab started on Fraport, a German airport operator.


Spekulatius

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Re: BME:AENA - Aena
« Reply #1 on: February 21, 2019, 03:25:36 PM »
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 Aenas passengers are from the UK), but I expect any dent in travel to be short lived. I put this on my watch list.
To be a realist, one has to believe in miracles.

fisch777

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Re: BME:AENA - Aena
« Reply #2 on: Today at 07:34:12 AM »
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.

Own The Rails

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Re: BME:AENA - Aena
« Reply #3 on: Today at 10:36:53 AM »
Yes, I definitely think the IPO wasn't executed properly. Frankly it is difficult to find high-quality infrastructure assets that also have growth potential. It also seems that the incentives are set up properly here given Aena doesn't have to fret over temporary contracts to operate---they themselves are the government.

On the UK passenger exposure, 30% is fairly high indeed, but I read recently that outbound travel volumes form the U.K. haven't fallen for this spring  / summer even with a hard Brexit looming. It sort of makes sense---worst case scenario you now have to bring your passport and stand in a customs queue, but if you have the money, you're going to go on holiday no matter what.

AJDelphi

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Re: BME:AENA - Aena
« Reply #4 on: Today at 12:37:26 PM »
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.