BUY HOLD SELL A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F Annual Dividend Rate BUSINESS DESCRIPTION Grupo Aeroportuario del Sureste, S. A. B. de C. V. holds concessions to operate, maintain, and develop airports in the southeast region of Mexico. Sector: Industrials Sub-Industry: Airport Services Source: S&P BUY BUY RATING SINCE 11/12/2010 TARGET PRICE $226.58 Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years TARGET PRICE $226.58 240 220 STOCK PERFORMANCE (%) 3 Mo. 1 Yr. 3 Yr (Ann) Price Change -14.10 27.38 9.41 GROWTH (%) Last Qtr 12 Mo. 3 Yr CAGR Revenues 58.33 18.87 12.29 Net Income 39.17 28.85 8.59 EPS 39.86 29.11 8.59 RETURN ON EQUITY (%) Ind Avg S&P 500 Q3 2017 17.42 15.81 13.41 Q3 2016 16.09 13.13 11.79 Q3 2015 13.08 17.06 12.91 P/E COMPARISON Rating History BUY Volume in Thousands 2015 2016 2017 COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History 200 180 160 140 120 750 500 250 0 22.25 24.08 Ind Avg 24.85 S&P 500 RECOMMENDATION We rate () a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any nesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant nesses which are likely to detract from the generally positive outlook. EPS ANALYSIS¹ ($) HIGHLIGHTS 's very impressive revenue growth greatly exceeded the industry average of 20.7%. Since the same quarter one year prior, revenues leaped by 58.3%. Growth in the company's revenue appears to have helped boost the earnings per share. Q1 1.63 Q2 1.51 Q3 1.17 2015 Q4 1.34 Q1 1.80 Q2 1.44 Q3 1.43 2016 NA = not available NM = not meaningful Q4 1.20 Q1 2.37 Q2 2.19 Q3 2.00 2017 1 Compustat fiscal year convention is used for all fundamental data items. The debt-to-equity ratio is somewhat low, currently at 0.61, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, has a quick ratio of 1.52, which demonstrates the ability of the company to cover short-term liquidity needs. The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Transportation Infrastructure industry and the overall market, 's return on equity exceeds that of both the industry average and the S&P 500. The gross profit margin for is rather high; currently it is at 60.20%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 33.99% significantly outperformed against the industry average. Net operating cash flow has significantly increased by 63.55% to $87.57 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 21.36%. PAGE 1
PEER GROUP ANALYSIS REVENUE GROWTH AND EBITDA MARGIN* Revenue Growth (TTM) SINO 0% 60% UNFAVORABLE 10% EBITDA Margin (TTM) MIC FAVORABLE OMAB 60% Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $31.2 Million and $5.5 Billion. Companies with NA or NM values do not appear. *EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization. REVENUE GROWTH AND EARNINGS YIELD Revenue Growth (TTM) 0% 60% UNFAVORABLE MIC 3% OMAB Earnings Yield (TTM) FAVORABLE SINO 13% Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between 8.5% and 56.5%. Companies with NA or NM values do not appear. INDUSTRY ANALYSIS The US transportation infrastructure industry includes owners and operators of airports, marine ports, highways, roads, tunnels, rail tracks, and associated services. The industry employs 13% of the total work force and contributes approximately 10% to US GDP. The industry is capital-intensive with well established entry barriers. Demand depends on the overall business environment. During periods of economic slowdown, many states and municipalities face budgetary constraints and deficits. On the other hand, infrastructure projects are a favorite of government stimulus projects. The cost of steel, cement, and other input materials used to develop and maintain such infrastructure has surged, pressuring margins. Revenue depends on legislative funding from federal, state, and municipal governments for transportation safety, highway construction and maintenance, and other infrastructure projects. Funds are allocated through a six-year federal highway bill. The industry is being affected by a supply/demand imbalance. As noted in a study by the Texas Transportation Institute (TTI), our deteriorating transportation system is costing the US economy more than $78 billion annually in lost time and fuel. The US transportation infrastructure, as it stands today, is not adequately equipped to handle higher freight and passenger volumes and requires huge investments to sustain growth. Underinvestment is hurting industry performance and legislation funding is inadequate to address the depth and breadth of transportation issues. The Association of American Railroads (AAR) estimates that the development of highways and related infrastructure requires investments of nearly $148 billion to keep pace with economic growth. A similar estimate shows that the inland waterway system requires investments worth $125 billion to accommodate cargo volume, which is expected to double by 2020. The Federal Aviation Administration (FAA) projects that around $41 billion will be needed in the next five years for the Airport Improvement Program. In acknowledging the importance of transportation infrastructure to the overall economy, the $28 billion American Recovery and Reinvestment Act (ARRA) to states and local authorities to maintain and construct highways and roads made a down-payment toward "shovel-ready" infrastructure needs. State highway authorities have already identified hundreds of more transportation projects that could be funded if the U.S. Congress finds the courage to raise tax revenue. Industry outlook is negative due to anemic economic conditions, uncertain funding, budgetary constraints faced by state and municipal authorities, and politicians who favor tax cuts to infrastructure investments. However, given the fierce economic threats from countries like China, which are investing heavily in infrastructure development and maintenance, the industry expects a new approach and renewed long-term investment in order to meet our nation s transportation, economic, and social objectives. PEER GROUP: Transportation Infrastructure Recent Market Price/ Net Sales Net Income Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M) GRUPO AEROPORTUARIO SUR 172.63 4,783 22.25 603.97 232.61 MIC MACQUARIE INFRASTRUCTURE CP 65.59 5,547 31.84 1,748.21 176.87 SINO SINO-GLOBAL SHIPPING AMERICA 3.09 31 7.73 11.45 3.63 OMAB GRUPO AEROPORTUARIO DEL CEN 37.79 1,625 17.41 353.09 106.31 The peer group comparison is based on Major Airport Services companies of comparable size. PAGE 2
Annual Dividend Rate COMPANY DESCRIPTION Grupo Aeroportuario del Sureste, S. A. B. de C. V. holds concessions to operate, maintain, and develop airports in the southeast region of Mexico. It operates nine airports that are located in the cities of Cancun, Merida, Villahermosa, Veracruz, Oaxaca, Huatulco, Cozumel, Minatitlan, and Tapachula. The company also provides aeronautical services, which include passenger, aircraft landing and parking, passenger walkway, and airport security services. In addition, it offers non-aeronautical services that comprise leasing of space at its airports to retailers, restaurants, airlines, and other commercial tenants; complementary services, such as catering, handling, and ground transportation services; and airport access, automobile parking and ground transport, and fuel services. Further, it provides construction services. Additionally, through its 60% joint venture, it operates the Luis Munoz Marin International Airport in San Juan, Puerto Rico. The company was founded in 1998 and is headquartered in Mexico City, Mexico. Bosque de Alisos No. 47A Mexico City 05120 MEX Phone: 52 55 5284 040 http://www.asur.com.mx Employees: 1000 STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and nesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock s valuation. Please refer to our Valuation section on page 5 for further information. FACTOR SCORE Growth 4.5 out of 5 stars Measures the growth of both the company's income statement and cash flow. On this factor, has a growth score better than 80% of the stocks we rate. Total Return 2.5 out of 5 stars Measures the historical price movement of the stock. The stock performance of this company has beaten 40% of the companies we cover. Efficiency 4.5 out of 5 stars Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 80% of the companies we review. Price volatility 2.5 out of 5 stars Measures the volatility of the company's stock price historically. The stock is less volatile than 40% of the stocks we monitor. Solvency 4.5 out of 5 stars Measures the solvency of the company based on several ratios. The company is more solvent than 80% of the companies we analyze. Income 4.0 out of 5 stars Measures dividend yield and payouts to shareholders. The company's dividend is higher than 70% of the companies we track. THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. PAGE 3
Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial FINANCIAL ANALYSIS 's gross profit margin for the third quarter of its fiscal year 2017 is essentially unchanged when compared to the same period a year ago. The company grew its sales and net income significantly quarter versus same quarter a year prior, and was able to outpace the average competitor in the industry when comparing revenue growth, but not when comparing net income growth. has liquidity. Currently, the Quick Ratio is 1.52 which shows the ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year. 1.91 Q4 FY17 8.15 E 2017(E) 9.19 E 2018(E) During the same period, stockholders' equity ("net worth") has increased by 19.01% from the same quarter last year. The key liquidity measurements indicate that the company is unlikely to face financial difficulties in the near future. INCOME STATEMENT Net Sales ($mil) 176.80 111.66 EBITDA ($mil) 103.71 64.37 EBIT ($mil) 90.50 58.01 Net Income ($mil) 60.11 43.19 STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. To learn more visit www.thestreetratings.com. BALANCE SHEET Cash & Equiv. ($mil) 423.13 182.12 Total Assets ($mil) 2,398.31 1,445.60 Total Debt ($mil) 810.69 215.17 Equity ($mil) 1,334.87 1,121.62 PROFITABILITY Gross Profit Margin 60.20% 59.79% EBITDA Margin 58.66% 57.64% Operating Margin 51.19% 5 Sales Turnover 0.25 0.35 Return on Assets 9.69% 12.48% Return on Equity 17.42% 16.09% DEBT Current Ratio 1.83 6.44 Debt/Capital 0.38 0.16 Interest Expense 11.34 1.50 Interest Coverage 7.98 38.62 SHARE DATA Shares outstanding (mil) 30 30 Div / share 0.00 0.00 EPS 2.00 1.43 Book value / share 44.50 37.39 Institutional Own % NA NA Avg Daily Volume 59,165 57,381 2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates. PAGE 4
RATINGS HISTORY Our rating for has not changed since 6/1/2009. As of 11/13/2017, the stock was trading at a price of which is 24.8% below its 52-week high of $229.44 and 31.1% above its 52-week low of $131.72. 2 Year Chart BUY: $154.83 2016 $250 $200 $150 MOST RECENT RATINGS CHANGES Date Price Action From To 11/13/15 $154.83 No Change Buy Buy Price reflects the closing price as of the date listed, if available RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET RATINGS (as of 11/13/2017) 44.07% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months. 30.62% Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss. 25.31% Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns. TheStreet Ratings 14 Wall Street, 15th Floor New York, NY 10005 www.thestreet.com Research Contact: 212-321-5381 Sales Contact: 866-321-8726 VALUATION BUY. This stock's P/E ratio indicates a discount compared to an average of 24.08 for the Transportation Infrastructure industry and a discount compared to the S&P 500 average of 24.85. To use another comparison, its price-to-book ratio of 3.88 indicates a premium versus the S&P 500 average of 3.16 and a discount versus the industry average of 4.99. The price-to-sales ratio is well above both the S&P 500 average and the industry average, indicating a premium. Upon assessment of these and other key valuation criteria, GRUPO AEROPORTUARIO SURESTE proves to trade at a discount to investment alternatives within the industry. Price/Earnings 22.25 Peers 24.08 Average. An average P/E ratio can signify an industry neutral price for a stock and an average growth expectation. is trading at a valuation on par with its peers. Price/Projected Earnings 18.78 Peers 25.53 Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations. is trading at a discount to its peers. Price/Book 3.88 Peers 4.99 Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. is trading at a discount to its peers. Price/Sales 8.57 Peers 6.10 Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. is trading at a significant premium to its industry. DISCLAIMER: Price/CashFlow 27.39 Peers 16.66 Premium. The P/CF ratio, a stock s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. is trading at a significant premium to its peers. Price to Earnings/Growth 0.57 Peers 0.51 Premium. The PEG ratio is the stock s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. trades at a premium to its peers. Earnings Growth lower higher 29.11 Peers 51.03 Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. However, is expected to significantly trail its peers on the basis of its earnings growth rate. Sales Growth lower higher 18.87 Peers 15.12 Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share. has a sales growth rate that exceeds its peers. The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as other third-party data providers. TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at http://www.thestreet.com/static/about/terms-of-use.html. PAGE 5