Rising Operating Costs Accompany Pacifico's Strong Passenger Growth, but Our Thesis Remains Intact
Wide-moat Grupo Aeroportuario Del Pacifico registered solid third-quarter results that featured 9% total passenger growth and operating margins slightly narrower than the second quarter last year. Our fair value estimate per ADR share is now $115 (from $116) after updating the spot rate in our model to reflect a weakening peso; however, our fair value estimate for the local shares is higher after we increased domestic traffic growth, subsequently raising revenue for Guadalajara for 2018. Our rev...Grupo Aeroportuario del Pacifico operates concessions to operate one international airport in Jamaica and twelve airports, which serve two major metropolitan areas (Guadalajara and Tijuana), several tourist destinations (Puerto Vallarta, Los Cabos, La Paz and Manzanillo), and a number of mid-sized cities (Hermosillo, Guanajuato, Morelia, Aguascalientes, Mexicali and Los Mochis). All of Co.'s airports are equipped to receive international flights and maintain customs, refueling and immigration services by the Mexican government. Also, Co. leases space to restaurants and retailers at its airports. In 2016, Co.'s airports served a total of approximately 32.6 million terminal passengers.
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