Mexican airline operator Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (OMAB) has authorized up to MXN$400 million for buyback of shares. The company can repurchase Series B shares during the fiscal year 2010 until it reports 2010 results.
OMAB also approved a cash dividend of MXN$400 million, or MXN$1 per share to be paid in four equal quarterly installments beginning July 15, 2010.
The above declaration was based on a 246.5% increase in net income during the fourth quarter of fiscal 2009. The increase was principally due to comprehensive financial income and the reversal of tax provisions taken earlier in 2009.
Moreover, we believe the company’s various strategic initiatives are likely to increase net earnings in the coming quarters. The principal actions were steps to protect aeronautical revenues, including the termination of the special incentive program for the Monterrey airport.
The company also planned to increase and improve commercial offering and the passenger services available in the airport terminals and to start new commercial services such as the NH Terminal 2 Hotel in Mexico City. OMAB has also enforced a policy of strict controls on costs and expenses.
The industry is also likely to show some improvements in 2010 as markets are picking up and oil prices are dipping to $82 per barrel. This can be a favorable situation for the OMAB.
Latin American and Chinese airline stocks will perform well in 2010 provided the overall economy continues to grow. Besides, the economic growth in emerging markets will be higher than in the developed markets.
We reiterate our Neutral recommendation on the ADR based on the decrease in passenger traffic during the first quarter of fiscal 2010. Total traffic decreased 10.5%, 12.5%, and 2.4% during January, February, and March, respectively. This is going to continue for the next couple of quarters as the company will take years to recover the losses incurred in 2008 and 2009.
Read the full analyst report on “OMAB”
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