Mexicans - they could teach us a few things about Capitalism!
In America, all our airports are government-owned and operated. But, in Mexico, all airports are privately operated and on very long leases from the govt. And, listen, these operators: holy cow, they've got the fat margins.
The one I really like is Grupo Aeroportuario Del Sureste (ASR)!
Last year, Southeastern Mexico got pounded by both Emily and Wilma, which basically wiped out the tourism business, and dramatically reduced international passenger travel for ASR.
Right now, Cancun's been messed up by the weather. It will recover and, when it does, ASR should too, because ASR controls their airport for the next 42 years.
I love the easier comparisons. Last year - hurricane. The new numbers come over and it'll be like: Holy Cow! Stop Trading!
For the past five
years, airport fees - these are the fees that airports charge airlines
- man, up 26.5%. There's no reason they shouldn't keep
increasing.
Airlines are a dime a dozen; it's their vicious and pointless
competition that makes them such bad businesses. But airports
are natural monopolies.
If ASR says they're raising the fees at their Cancun airport, the
airlines will pay, even if they can't afford to. You see,
they don't have a choice because their businesses are dogs and they are
hostage to ASR. I think these fees keep rising.
ASR's trading at about 19x forward earnings, on 24% revenue
growth. Too cheap? You bet it's too
cheap! I'm 'mon-backing here; I'm 'mon-backing.
The
bottom line!:
ASR is turning itself around. It's got the kind of pricing
power only available to a monopolist. I think you buy it.
