No-moat Aeroports de Paris ADP reported 2012 gross activity of EUR 2.7 billion, and an increase of 5.8% from 2011. The year proved to be busy for the company as it purchased a 38% stake in TAV Airports, the leading airport operator in Turkey, for EUR 668 million and an implied value of 5.3 times 2012 EBITDA.
Aeroports de Paris completed significant capital projects during the year, and may not need further expansion at Charles de Gaulle until 2023. The company enjoys a monopoly position, but must discuss pricing and returns on capital with the French government, which has not allowed Aeroports to earn a return above its cost of capital.
Traffic increased 0.8% for the full year and aided retail and services sales, which grew 7.3%. Sales per passenger in shopping areas improved 11.3% to EUR 16.8, as reported by ADP. Aviation sales expanded by 5% from higher traffic combined with a 3.4% tariff increase from April 1, 2012. Real estate also grew 5% with more leases and higher rates that took effect on Jan. 1, 2012.
Finally, divestment activities (disposal of Masternaut in its Hub Telecom business) and the conclusion of airport management contracts in 2011 resulted in a 3.5% decline in other activity revenue. Aeroports is currently operating under an Economic Regulation Agreement that covers 2011 though 2015. The company is maintaining the focus on high customer satisfaction to drive retail sales and should deliver low but stable growth. Furthermore, it will initiate a cost savings program to limit growth in operation costs to 3% per year. Our projections are not as rosy (and see more than 4% growth per year), and provide upside to their fair value estimates.
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