Business Context and Reporting Period
Company: Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Third quarter and nine months ended September 30, 2007
Date of Filing: October 24, 2007
Business Overview: ASUR is the first privatized airport group in Mexico, operating nine airports in the southeast region, including the major hub at Cancun. The company reported unaudited results prepared under Mexican Financial Reporting Standards, expressed in constant Mexican pesos.
Key Financial Metrics
Third Quarter 2007 (3Q07)
| Metric | 3Q06 | 3Q07 | % Change |
|---|---|---|---|
| Total Revenues | Ps. 575.5 million | Ps. 688.0 million | 19.54% |
| Operating Profit | Ps. 192.7 million | Ps. 284.3 million | 47.52% |
| EBITDA | Ps. 318.7 million | Ps. 423.8 million | 32.98% |
| Net Income | Ps. 86.0 million | Ps. 238.6 million | 177.55% |
| Operating Margin | 33.48% | 41.32% | N/A |
| EBITDA Margin | 55.38% | 61.40% | N/A |
| Earnings per Share (Ps.) | 0.2865 | 0.7952 | 177.55% |
Nine Months Ended September 30, 2007 (9M07)
| Metric | 9M06 | 9M07 | % Change |
|---|---|---|---|
| Total Revenues | Ps. 1,714.0 million | Ps. 2,091.9 million | 22.05% |
| Operating Profit | Ps. 637.1 million | Ps. 916.3 million | 43.82% |
| EBITDA | Ps. 1,008.2 million | Ps. 1,309.0 million | 29.84% |
| Net Income | Ps. 405.8 million | Ps. 702.6 million | 73.14% |
| Operating Margin | 37.17% | 43.80% | N/A |
| EBITDA Margin | 58.82% | 62.57% | N/A |
Liquidity and Balance Sheet (as of Sept 30, 2007)
- Cash and Marketable Securities: Ps. 1,766.2 million
- Total Liabilities: Ps. 1,357.9 million (8.57% of total assets)
- Shareholder's Equity: Ps. 14,476.9 million (91.50% of total assets)
- Capital Expenditures (9M07): Ps. 451.9 million
Material Changes vs. Prior Period
- Passenger Traffic: Total traffic increased 13.78% in 3Q07 and 18.91% in 9M07. The 3Q07 growth was significantly aided by a low base in 3Q06 due to Hurricane Wilma's impact on the region. Domestic traffic grew 28.28% (3Q07), while international traffic grew 2.17%.
- Revenue Composition: Non-aeronautical revenues surged 53.75% in 3Q07, driven by a 59.45% increase in commercial revenues. This was largely due to the opening of Cancun Airport's new Terminal 3 in May 2007, which introduced new duty-free, retail, and food & beverage outlets.
- Profitability: Operating margins expanded significantly (from 33.48% to 41.32% in 3Q07) as revenue growth outpaced cost increases. Net income more than doubled in the quarter.
- Cost Structure: Operating costs rose 5.46% in 3Q07. Increases were driven by higher depreciation (10.74%), technical assistance fees (32.12%, linked to EBITDA), and concession fees (19.60%).
Outlook, Risks, and Management Commentary
- Terminal 3 Impact: Management attributes significant revenue growth to the May 2007 opening of Terminal 3 at Cancun, which expanded commercial space and improved concession terms.
- Regulatory Environment: The Mexican Ministry of Communications and Transportation regulates maximum rates. Regulated revenues accounted for 71.67% of total income in 9M07. Compliance is reviewed annually.
- Competitive Landscape: On October 1, 2007, the Federal Competition Commission issued an opinion on the competitiveness of Mexican airports. ASUR and other airport groups issued a joint response on October 4, 2007.
- Risks: The filing includes standard forward-looking statement disclaimers. Specific risks mentioned include the impact of social unrest (noted as a cause for decreased traffic in Oaxaca) and the lingering effects of natural disasters like Hurricane Wilma, though recovery is noted.
- Unusual Items: A one-time payment of Ps. 18.0 million was received from a lessee for a restaurant lease, contributing to Food & Beverage revenue growth. Asset tax payments of Ps. 22.8 million were made, with Ps. 17.3 million recorded as an asset for future tax credits.
Investor Verification Checklist
- Base Effect Analysis: Verify the extent to which 3Q07 growth is driven by the low 3Q06 base caused by Hurricane Wilma versus organic growth.
- Terminal 3 Sustainability: Assess whether the revenue uplift from the new Terminal 3 is sustainable or if it represents a one-time step-change.
- Regulatory Cap Compliance: Monitor the annual review by the Ministry of Communications and Transportation to ensure regulated revenues do not exceed maximum allowed rates.
- Oaxaca Traffic Trends: Investigate the 31.91% drop in international traffic to Oaxaca due to social unrest and its potential long-term impact.
- Cost Inflation: Review the trajectory of technical assistance fees and concession fees, which are tied to revenue/EBITDA performance.