Pacific Airport Group

Wide-moat Mexican/Jamaican airport concessionaire with top-decile margins and returns, tempered by a real revenue stall.

Strengths

• Operating margin 97th, OCF margin 94th, net margin 90th pct — exceptional profitability
• ROE 36% (87th), ROA 10.9% (90th), ROIC 16.4% (87th) on a regulated concession monopoly

Risks

• Revenue fell ~17% (11th pct) and net income ~25%; high debt/equity (90th pct), current ratio 0.85
• Regulated tariff resets and U.S.-Mexico tariff/immigration policy threaten traffic

Notable findings

• Weak liquidityCurrent ratio 0.85 (<1)
• Material weakness• If we fail to maintain effective internal controls, any material weakness could adversely affect our ability to report our results of operations accurately and could cause a loss of investor confide
• Customer concentration~55% of revenue from one customer/distributor — 9%, and 55
• Revenue declineRevenue -17.2% YoY