Wide-moat Grupo Aeroportuario del Centro Norte (OMA) OMAB reported 4.6% year-over-year growth in passenger traffic during the first quarter of 2013, along with solid improvement in operating margins to 43.1% from 41.8%. Total sales improved 10.7% and was led by a 20.9% increase in nonaeronautical revenue, the fourth quarter of acceleration. The strong nonaeronautical sales result from OMA’s diversification activities over the last several years, and operating margins have moved higher in step. For example, in 2009, nonaeronautical sales were 19.5% of total revenue, and operating margins were 29.5%; for the first quarter of 2013, the respective values were 26.2% and 43.1%. With that success, OMA will spend between MXN 100 million to MXN 200 million in diversification strategies during 2013, a smart investment in our view.

We are making no changes to our $21 fair value estimate that looked for lower growth rates for traffic and total sales in 2013. This appears consistent with OMA’s outlook that it provided in its first quarter 2013 release. Specifically, it sees traffic increasing 3.5%-4.5% and sales to grow 8%-10%. This compares to 7% traffic and 14.7% sales increases posted in 2012. It also sees adjusted EBITDA dropping to 50.5%-52.0% of sales from 53.6% in 2012.