Top Mexican airport operator Aeroportuario del Sureste, S.A.B. de C.V. (ASR), posted stellar numbers for the third quarter of fiscal 2010 with 29.9% and a 33.7% increase in bottom and top-line results, respectively.
Earnings per ADS rose to reach 59 cents from 45 cents in the third quarter of fiscal 2009. However, it failed to surpass the Zacks Consensus Estimate of 74 cents. Net income reached $17.3 million from $13.0 million in the corresponding quarter of fiscal 2009.
The increase was attributable to the new tax law announced by the Mexican government with retrospectively from January 1, 2008. According to the new law, the Mexican companies are just liable to pay a flat business tax rate coupled with no assets tax.
The 33.7% leap in total revenues also supported bottom-line results. Total revenues reached $74.5 million from $54.3 million in the year-ago quarter. Aeronautical and non-aeronautical revenues topped 15.6% and 18.5%, respectively and commercial revenues increased 18.1% year over year.
Aeroportuario del Sureste recorded a 10.8% increase in passenger traffic for the third quarter of fiscal 2010 in comparison with the same period of fiscal 2009. Domestic traffic rose 1.3% while International traffic shot up by 20.9% year over year.
Aeroportuario del Sureste together with Grupo Aeroportuario del Pacífico S.A.B. de C.V. (PAC), Aeroportuario del Centro Norte S.A.B. de C.V. (OMAB) have been experiencing an increase in passenger traffic since the second quarter of fiscal 2010 compared to the huge drop in traffic during the same period in fiscal 2009.
The decrease in passenger traffic from the second quarter of fiscal 2009 through March 2010 was based on the H1N1 flu, which broke out in April 2009, and the difficult business environment due to the economic instability since the second half of fiscal 2008.
However, markets are now gradually picking up and are expected to show some decent results in the coming years. Fuel prices have also reduced to their mid-80s from the peak of nearly $150 per barrel. The International Air Transport Association (IATA) expects the airline industry to make a profit of $2.5 billion in 2010.
We maintain our long term Outperform recommendation on Aeroportuario del Sureste. For the shorter term, Aeroportuario del Sureste currently retain its Zacks #3 Rank, equivalent to a short-term Hold rating.
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