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URL:  http://boards.fool.com/grupo-aeroportuario-del-pac237fico-nyse-pac-26855641.aspx

Subject:  Grupo Aeroportuario del Pacífico (NYSE: PAC Date:  7/29/2008  10:32 AM
Author:  TMFRedwood Number:  40 of 89

Grupo Aeroportuario del Pacífico S.A.B. de C.V. (NYSE: PAC)

Recent Price: $29.81
Market Cap $1.7B
2007 Revenue $343M Net Income $173M FCF $167M
Min. dividend yield: 2.9% Est. yield: 5.5-6.0%
Intrinsic Value: $50+

Thesis
This is the 10th most profitable airport group in the world trading at a compelling valuation due to weakening airline traffic, driven by high fuel prices & slowing economic growth.

Company Description
PAC owns 50-year concessions to manage 12 airports in Mexico, including Guadalajara, Tijuana, Los Cabos, and Puerta Vallarta.

Why Buy?
• Low risk, monopoly-type business
• Fast-growing industry over time, driven by economic growth, market share gains from busses, low cost airlines
• Superior economics – EBITDA margins are 65% and net margins are 40%
• Very cheap – trades at a deep discount to historical multiples based on a weak near term outlook

Risks
• Economic weakness in Mexico or US leads to less travel
• High fuel prices force low cost airlines to cut more capacity or bankrupt some carriers
• Mexican government tries to steal economics away from the airports
• Changing of the long term trend of increasing commercial revenue per passenger
• Currency risk

Intrinsic value for this company is more than $50. As a comparison, Copenhagen Airports A/S serves under 2 million residents. Its enterprise value is $3.1 billion and it generated $620M in revenue and $165M in earnings last year. PAC trades at a lower multiple but is more profitable and has much more growth ahead of it – Guadalajara alone is home to 5 million people. At $1.7 billion, the company is a steal.

Aero-Pac is a premier asset trading at an incredible price. In its focus on the short-term, the market is missing the superior economics and long term growth potential. I opened up an initial 2% position at $27.73. At lower prices I would increase my stake up to 6%.

-Andrew
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