Grupo Aeroportuario Del Centro Norte: World Cup Inflection? (Ticker: OMAB)

Plus, long-term catalysts still in play.

Upcoming schedule: Wix (quarterly update), Airbnb (quarterly update), and Corporacion America Airports (Full Research Report).

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“For a random week in January, there is currently only one direct round-trip flight from Monterrey to Cabo. For the same dates, there are six leaving Los Angeles. You will not have six daily flights from Monterrey to Cabo by 2030, but is there room for two? Three? As Monterrey citizens become wealthier, there should certainly be. This is a metro area with over 5 million people and an ideal population pyramid to grow this population and per capita incomes over the next two decades.”

I wrote this in late December of last year. Grupo Aeroportuario Del Centro Norte (Grupo OMAB) has since fallen 11% year-to-date (YTD) in US dollar terms, driven by a slowdown in international traffic at Monterrey.

Investors are concerned about a simultaneous slowdown in international traffic (passengers are down 2.9% YTD through May) and the threat of higher airline ticket prices due to rising fuel costs. We also had a short scare when the cartels “terrorized” Mexico in March (remember that story?). With this stock drop, shares have traded back to an EV/EBITDA of 9.

Many of the catalysts discussed previously are still in play, including the expansion plans at the Monterrey airport, inflation-protected price increases, and this summer’s World Cup in Mexico driving a temporary boost to the economy. Long-term, there is still a massive tailwind from the reshoring thesis and escape from the middle-income trap for Northern Mexico.

In this Friday newsletter, I will cover:

• Traffic update

• Incoming price hikes

• Remaining catalysts

• Is there still an emerging moat?

• My investment decision

• Portfolio update

Traffic Update