Latin American Equity Research. Mr. F. Chico to Tender for 42.65% of Asur Shares at M$56.00

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1 Latin American Equity Research Mexico City, March 30, 2007 Flashnote Mexico Airports ASUR Mr. F. Chico to Tender for 42.65% of Asur Shares at M$56.00 BUY Gonzalo Fernández* Vivian Salomón* Mexico: Banco Santander, S.A. Mexico. Banco Santander, S.A. (5255) / gofernandez@santander.com.mx (5255) / vsalomon@santander.com.mx (03/30/07) CURRENT PRICE: US$48.19/M$52.60 TARGET PRICE: US$46.00/M$53.00 News On March , Mr. Fernando Chico Pardo announced his intention to make a tender offer for 42.65% of shares in Asur at M$56.00 per share (US$50.85 per ADR). Company Statistics Bloomberg ASR 52-Week Range (US$) US$ US$ E P/E Rel to the IPC (x) E P/E Rel to Airports (x) 0.95 [Local Index] (US$) 2, Yr CAGR (04-07E) 21.7% Market Capitalization (US$ Mn) 1, Float (%) 85 3-Mth Avg Daily Vol (US$000) 4.5 Shares Outst Mn (ADR 10:1) 300 Net Debt/Equity (x) Book Value per ADR (US$) 40.8 Estimates and Valuation Ratios E 2007E 2008E Net Earn (M$ - Mn) ,114.0 Current EPS Net Earn (US$ - Mn) Current EPADR P/E (x) P/Sales (x) P/CE (x) FV/EBITDA (x) FV/Sales (x) FCF Yield (%) Div per ADR (US$) Div Yield (%) Sources: Bloomberg, Company reports and Santander Investment estimates. News/Analysis: Asur management issued press release on March 30 stating that Mr. Fernando Chico Pardo, the company s chairman and temporary CEO, delivered an indicative proposal to Asur s Board of directors to purchase 42.65% of Asur B class shares at a price of M$56.00 per local share (US$50.85 at the current exchange rate). Mr. Chico Pardo currently holds 7.5% of Asur BB shares through ITA (Asur s strategic partner), and the current free float of B shares stands at 85%. Upon the completion of the offer and other operations related to Copenhagen airports (CPH) stake in ITA, Mr. Chico Pardo would hold 50% plus one share of Asur s total capital stock in the form of B shares, and 3.9% through ITA in the form of BB shares for a total of 54.0%. A new Special Purpose Vehicle (to be created) would hold 7.5% of BB shares (CPH 49% and Fernando Chico 51%), and the free float would fall from 85% to 49.85%. After these operations, CPH would reduce its stake in Asur from close to 10% to 3.85%. The proposal indicates that Mr. Chico Pardo intends to consolidate his control of the company through this operation, and that he is not planning any significant changes to Asur s current operations or management. In terms of valuation, the tender price represents a 15% premium over Asur s stock average trading price on March 28, and is 21% above our year-end target price for 2007 of US$46.00 per ADR At the price of the potential tender offer (M$56.0) Asur would be trading at an estimated FV/EBITDA of 11.1 times for 2007 and 9.4 times for 2008, with a 3.9% and 6.2% discount as compared to GAP. In terms of P/E Asur would be trading at premiums of 13.6% and 4.6% respectively. Net/Net: At first glance, the terms of the offer appear attractive in terms of valuation, the premium to the previous trading price, and our 2007 target price. Nevertheless, we believe that Mr. Chico Pardo still sees value beyond the M$56.00 level. We recommend investors wait until there is more information available regarding this potential additional value, or any change in strategy by Asur after this tender offer. Valuation and Risks to Investment Thesis: Our year-end 2007 target price is based on a discounted free cash flow valuation and implies a target FV/EBITDA multiple of 10.1x for 2007, similar to the current FV/EBITDA for 2006E. Risks would include the continuity of the recovery in traffic in Cancun, which is the main driver of revenue for Asur; the possibility of the construction of a second airport in the Cancun region, natural disasters such as hurricanes, terrorist threats and changes in the airport law that could imply additional security costs for airport operators. * Employed by a non-us affiliate of Santander Investment Securities, Inc. and is not registered/qualified as a research analyst under NASD rules.

2 Asur Flashnote CONDITIONS OF THE TENDER OFFER Mr. Fernando Chico Pardo, Asur s chairman and interim CEO, delivered an indicative proposal to Asur s Board of directors to purchase 42.65% of Asur B shares at M$56.00 per local share (US$50.85 at the current exchange rate). This would imply a total tender offer of approximately US$610 million. If Mr. Chico Pardo successfully purchases 42.65% of B shares, he would increase his stake in Asur to 50% plus one share. In addition, upon the successful completion of the offer, ITA apparently plans to spin off a newly created company holding 7.35% of total capital stock in ASUR in the form of series B shares (resulting from the conversion of series BB shares representing 7.35% of ASUR's capital stock). The indicative proposal also states that Copenhagen Airports has agreed to transfer its interest in the spun-off company holding these newly created series B shares to Mr. Chico Pardo, and to tender its current holding of 2.5% in B shares. Following such a spin-off, ITA would own series BB shares representing 7.65% of ASUR's capital stock, and Mr Chico Pardo a total of 54.0%. Other conditions for the tender are the required approvals from Mexico s Communications Minister (SCT), the National Banking and Securities Commission (CNBV), Mexico Antitrust Commission, Asur s Board of Directors, and the transfer of shares representing 42.65% of Asur capital in the offer. No dates have been set for the tender offer, however, Adolfo Castro (Asur s CFO) told us that the two main conditions are approval from the SCT and CNBV, and he estimates that these could be obtained in approximately 30 days. Figure 1. Asur - Current Shareholder Structure Source: Company reports. 2

3 Figure 2. Asur - Proposed Shareholder Structure Source: Company reports. VALUATION At the potential tender offer price (M$56.0), Asur would be trading at an estimated FV/EBITDA of 11.1 times for 2007 and 9.4 times for 2008, at a 3.9% and 6.2% discount compared with GAP. In terms of its P/E multiple, Asur would be trading at premiums of 13.6% and 4.6% over GAP, respectively. In our opinion, because of the risk of the construction of the Mayan Riviera airport, a second in the area that would compete directly with Cancun, or just imply additional investments for Asur, the discount versus GAP is justified. The valuation of the tender offer appears fair, in our opinion. Figure 3. Comparative Valuation of Mexican Airport Operators, 2077E-2008E Price US$/ADR Target Upside/ P/E P/E FV/EBITDA FV/EBITDA Mkt. Company Rec. 30-Mar Price Down 2007E 2008E 2007E 2008E Cap US$ Mn ASUR Buy % ,526 GAP Hold % ,396 Asur / GAP 13.6% 4.6% -3.9% -6.2% Sources: Company reports and SI Estimates, * The valuation of Asur is considering the tender price. WHY IS MR. CHICO PARDO BUYING? Of course the main question is what does Mr. Chico Pardo see in Asur that we apparently cannot? Because he obviously is signaling that he sees value beyond the M$56.00 level, and considers the stock undervalued. In our opinion the possibilities are based on the following: Increased dividend policy. Because of its zero leverage and strong cash position, Asur could issue debt and increase its dividend payment. Holding 54% of the company, Mr. Chico Pardo would receive an equal proportion of the dividend, thus partially financing his purchase. Current Mexican tax regulation makes a very aggressive dividend policy difficult. 3

4 Asur Flashnote The Riviera Maya airport is less of a negative factor than it seems. One of our main concerns and the reason that, in our opinion, justifies Asur s valuation discount, is the strong possibility of the construction of a second airport close to Cancun, which would directly compete with Asur s airport. The government has expressed its intention to open a tender offer for the construction and operation of this airport during the second half of 2007 and Asur, coupled with a significant number of investors, have expressed their intention to take part. In our opinion, this is a loose-loose situation for Asur, because it would imply loosing traffic in Cancun or making an investment in the second airport to manage the same traffic. It is possible that Mr. Chico Pardo s reading on this issue is different, and thus he considers this as an attractive investment alternative rather than a negative. Potential of other businesses. It is possible that Mr Chico Pardo has identified potential investments in businesses related to the airport business that we are not considering in our current estimates, and in which Asur can participate, namely airports outside Mexico, airlines, hotels, or other business areas. These potential investments could imply additional value for Asur shareholders. Because of his track record as a businessman in Mexico, we believe that Mr. Chico Pardo can generate additional value in Asur, and we believe that he sees additional value beyond Asur s pure airport business operation model. As a result, we prefer to wait for more information regarding the potential additional value in Asur that Mr. Chico Pardo apparently sees. 4

5 IMPORTANT DISCLOSURES Asur Three-Year Stock Performance (U.S. Dollars) B $ /3/04 SB $ /4/04 H$ /8/05 B $ /21/05 B $ /20/05 H$ /28/05 B $ /1/06 B $ /26/06 3,000 2,500 2,000 1,500 1,000 Analyst Recommendations and Price Objectives SB: Strong Buy B: Buy H: Hold UP: Underperform S: Sell UR: Under Review 6 D-03 M-04 J-04 S-04 D-04 M-05 J-05 S-05 D-05 M-06 J-06 S-06 D Asur ( L Axis) IPC(RAxis) Source: Santander Investment. 5

6 Key to Investment Codes IMPORTANT DISCLOSURES (CONTINUED) Rating Definition Strong Buy Expected to outperform the local market more than 15%. Buy Expected to outperform the local market 5%-15%. % of Companies Covered with This Rating % of Companies Provided Investment Banking Services in the Past 12 Months 51.45% 84.21% Hold Expected to perform within a range of 5% above or below the local market % 15.79% Underperform Expected to underperform the local market 5%-15%. 9.42% Sell Expected to underperform the local market more than 15%. The numbers above reflect our Latin American universe. For a discussion, if applicable, of the valuation methods used to determine the price targets included in this report and the risks to achieving these targets, please refer to the latest published research on these stocks. Research is available through your sales representative and other electronic systems. Target prices are 2007 year-end unless otherwise specified. Recommendations are based on a total return basis (expected share price appreciation + prospective dividend yield) unless otherwise specified. Stock price charts and rating histories for companies discussed in this report are also available by written request to Santander Investment Securities Inc., 45 East 53 rd Street, 17 th Floor (Attn: Research Disclosures), New York, NY USA. Ratings are established when the firm sets a target price and/or when maintaining or reiterating the rating. Ratings may not coincide with the above methodology due to price volatility. Management reserves the right to maintain or to modify ratings on any specific stock and will disclose this in the report when it occurs. Valuation methodologies vary from stock to stock, analyst to analyst, and country to country. Any investment in Latin American equities is, by its nature, risky. A full discussion of valuation methodology and risks related to achieving the target price of the subject security is included in the body of this report. The benchmark used for establishing Argentina recommendations is our forecast of the year-end Argentina IFCI index. For the Andean countries, our benchmark is the simple average of the country risk of each country plus the 10 year U.S. T-Bond yield plus 5.5% of equity risk premium. For additional information about our rating methodology, please call (212) This report has been prepared by Santander Investment Securities Inc. ( SIS ) (a subsidiary of Santander Investment S.A., which is wholly owned by Banco Santander Central Hispano, S.A. ("Santander"), on behalf of itself and its affiliates (collectively, Grupo Santander) and is provided for information purposes only. This document must not be considered as an offer to sell or a solicitation of an offer to buy any relevant securities (i.e., securities mentioned herein or of the same issuer and/or options, warrants, or rights with respect to or interests in any such securities). Any decision by the recipient to buy or to sell should be based on publicly available information on the related security and, where appropriate, should take into account the content of the related prospectus filed with and available from the entity governing the related market and the company issuing the security. This report is issued in Spain by Santander Central Hispano Bolsa, Sociedad de Valores, S.A. (SCH Bolsa), and in the United Kingdom by Santander Central Hispano S.A., London Branch (Santander London), which is regulated by the Financial Services Authority in the conduct of investment business in the UK. This report is not being issued to private customers. SIS, Santander London, and SCH Bolsa are members of Grupo Santander. The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed, that their recommendations reflect solely and exclusively their personal opinions, and that such opinions were prepared in an independent and autonomous manner, including as regards the institution to which they are linked, and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report, since their compensation and the compensation system applying to Grupo Santander and any of its affiliates is not pegged to the pricing of any of the securities issued by the companies evaluated in the report, or to the income arising from the businesses and financial transactions carried out by Grupo Santander and any of its affiliates: Gonzalo Fernandez and Vivian Salamom. Grupo Santander receives non-investment banking revenue from the subject companies, with the exception of Asur. The information contained herein has been compiled from sources believed to be reliable, but, although all reasonable care has been taken to ensure that the information contained herein is not untrue or misleading, we make no representation that it is accurate or complete and it should not be relied upon as such. All opinions and estimates included herein constitute our judgment as at the date of this report and are subject to change without notice. Any U.S. recipient of this report (other than a registered broker-dealer or a bank acting in a broker-dealer capacity) that would like to effect any transaction in any security discussed herein should contact and place orders in the United States with SIS, which, without in any way limiting the foregoing, accepts responsibility (solely for purposes of and within the meaning of Rule 15a-6 under the U.S. Securities Exchange Act of 1934) for this report and its dissemination in the United States by Santander Investment Securities Inc. All Rights Reserved. 2007