To The Moon

$Corporacion America Airports S.A.(CAAP)$ $Grupo Aeroportuario del Pacifico SAB de CV(PAC)$ $Grupo Aeroportuario del Sureste SAB de CV(ASR)$ 

🎯 Executive Summary

I’m convinced Q3 2025 marks a structural inflection point for Corporación América Airports. The headlines show a revenue miss of $475.4M vs $492M and Adjusted EPS of $0.30 vs $0.47, yet the deeper layer reveals a company delivering extraordinary operational leverage. Total consolidated revenue reached $527.3M when including $55.2M in construction services, a detail the market often overlooks but which reinforces the breadth of CAAP’s revenue engines. Adjusted EBITDA surged 33.6% YoY to a record $194.3M with margins expanding to 41.2%, and operating income jumped 45.6% to $147.0M with margin lifting to 27.9%. Passenger traffic grew 9.3% YoY to 23.3M, and Argentina’s inflation to devaluation dynamics finally stabilised enough to create the most favourable operating condition CAAP has seen in years. With $540.4M in cash, a rock solid 0.9x Net Debt to LTM EBITDA, a Florence EIA approval, a Baghdad award agreement, Armenia’s capex approvals progressing, Angola’s tender moving forward, and October 2025 traffic accelerating to 10.2%, CAAP is shifting from post pandemic recovery into globally diversified expansion.

🐂 Bull Case

• Adjusted EBITDA ex IFRIC12 soared 33.6% YoY to $194.3M, with margin expansion of 520bps to 41.2%, proving cost structures have normalised after Argentina’s inflation volatility.

• Commercial revenue expanded 18% YoY versus 9.3% traffic growth, driven by Armenia’s redesigned Duty Free, Uruguay’s expanded Duty Free area, and a new VIP lounge that materially lifts spend per passenger.

• Aeronautical revenue grew to $246.0M (+15.2% YoY ex IFRIC12) with non aeronautical rising to $281.2M (+13.3% YoY), demonstrating monetisation depth across both sides of the portfolio.

• Operating income jumped 45.6% to $147.0M with margin rising to 27.9% from 21.9%, signalling powerful bottom line flow through that often goes underappreciated relative to EBITDA.

• Net income attributable to owners reached $55.1M, up 275.2% YoY, while the ex IAS 29 hyperinflation adjusted figure is $48.9M. This distinction boosts transparency and shows how CAAP is navigating Argentine accounting complexity.

• AA2000 concession rebalancing is progressing, reducing regulatory uncertainty and stabilising fee dynamics in Argentina.

• Liquidity remains fortress level with $540.4M cash and only 0.9x Net Debt to LTM EBITDA, giving CAAP full optionality ahead of the Florence, Armenia, and Iraq capex cycles.

• The expansion pipeline has broadened beyond Baghdad and Florence. Armenia’s Yerevan Airport capex approvals are moving forward. The government process in Angola is advancing. Management is evaluating multiple additional jurisdictions, showing disciplined M&A sequencing.

• October 2025 traffic accelerated to +10.2% YoY with Argentina at +11.6%, signalling that momentum into Q4 remains intact despite management’s caution about domestic moderation.

🐻 Bear Case

• Revenue missed consensus by 3.4% and EPS missed by 36%, creating headline pressure for surface level readers.

• Cargo volume fell 3.4% YoY to 93.5K tons, reinforcing softness in freight demand across Latin America.

• Q3 margin expansion benefited from easy comps that will not repeat in Q4, and management confirmed a likely deceleration in YoY EBITDA growth.

• Domestic Argentine traffic, while still robust, is set to moderate after an unusually strong run.

• FX volatility in ARS, BRL, UYU, and EUR could pressure margins, capex costs, and financial income lines.

• Concession early termination risk exists within Argentina’s AA2000 structure, a structural overhang for institutional investors.

• Baghdad’s economics and capital stack remain unclear, with ongoing uncertainty around whether CAAP will assume full concession risk or operate under a management framework.

• Florence and Armenia require flawless sequencing in 2026, and any delay could temporarily raise leverage toward the upper band.

• Uninsurable geopolitical or epidemic events across Iraq, Armenia, Brazil, Uruguay, or Italy remain a material operator risk.

💰 Financial Performance Breakdown

• Consolidated Revenue: $527.3M including $55.2M construction revenue.

• Revenue ex IFRIC12: $472.1M, up 16.6% YoY.

• Aeronautical Revenue: $246.0M, up 15.2% YoY ex IFRIC12.

• Non Aeronautical Revenue: $281.2M, up 13.3% YoY.

• Passenger Traffic: 23.3M, up 9.3% YoY.

• Cargo Volume: 93.5K tons, down 3.4%.

• Operating Income: $147.0M, up 45.6% YoY.

• Operating Margin: 27.9% vs 21.9% YoY.

• Adjusted EBITDA ex IFRIC12: $194.3M, up 33.6% YoY.

• Adjusted EBITDA Margin: 41.2% vs 35.9%.

• Net Income to Owners: $55.1M reported, up 275.2%.

• Net Income ex IAS 29: $48.9M.

• Cash and Equivalents: $540.4M.

• Net Debt to LTM EBITDA: 0.9x.

• Aircraft Movements: 230.3K, up 6.9%.

• October Traffic Update: 7.63M passengers, up 10.2% YoY, cargo up 1.1%.

🛠️ Strategic Headwinds and Execution Risk

• Domestic Argentine travel is moderating, which aligns with management guidance. Q4 will not benefit from the favourable comps that powered Q3’s margin expansion.

• FX remains a key headwind. ARS devaluation could resurface and impact both revenue and input costs. BRL, UYU, and EUR volatility could also drive cross currency pressure.

• Cargo softness remains a drag, and freight markets have not stabilised across the region.

• Florence’s runway and terminal plans require capital discipline through 2026. Armenia’s capex approval pipeline introduces additional execution sequencing risk.

• Baghdad’s structure has not yet been fully disclosed. Clarity on capital intensity, concession length, and expected returns will be essential to determine long term accretion.

• Angola’s tender process remains competitive, and regulatory outcomes could alter the expansion roadmap.

• Concession revocation clauses within Argentina’s AA2000 structure remain a non trivial structural risk.

🧠 Analyst and Institutional Sentiment

Analysts from JPMorgan and Morgan Stanley have reiterated broadly neutral ratings but acknowledge CAAP’s margin outperformance and strengthened balance sheet. Early discussions indicate potential upward multiple revisions if CAAP can deliver margin stability into Q4 despite tougher comps.

Peers like PAC and ADP trade at 10x to 12x EV EBITDA. CAAP trades at 8.38x trailing per your chart, reflecting discounting linked to Argentine jurisdictional risk rather than operating performance.

ETF flows into EM infrastructure have accelerated since October, creating passive tailwinds that benefit CAAP’s liquidity and price discovery.

Institutional sentiment remains cautiously bullish with emphasis on the company’s low leverage, high EBITDA momentum, and multi market pipeline.

📉📈 Technical Setup After Earnings

Daily chart:

• Price at $22.78 with a clear uptrend structure.

• Price sits above the 13 EMA, 21 EMA, and 55 EMA with slope alignment confirming trend continuation.

• Keltner and Bollinger bands show controlled expansion after an initial volatility burst.

• First resistance sits at $23.50. Secondary resistance at $24.80.

• Immediate support at $21.60 with deeper structural support at $20.30.

30 minute chart:

• Consolidation between $22.40 and $22.90 with repeated tests of the mid Keltner band, suggesting absorption.

• Volume pockets fill near $22.20 indicating strong demand.

Targets:

• Base Target: $24.50.

• Stretch Target: $26.00 into year end if October traffic strength persists.

🌍 Macro and Peer Context

• Argentina is stabilising but remains fragile. Inflation is down materially from 2024 levels, but ARS devaluation remains a risk across both cost and revenue lines.

• Europe and the Middle East are benefitting from a strong travel rebound which supports Florence and Baghdad. Italy’s YoY traffic growth aligns with CAAP’s forward plans.

• Brazil and Uruguay are delivering steady 8 to 10% traffic growth. Armenia’s commercial upgrades are driving per passenger spend.

• PAC, ADP, and ASR are seeing similar top line trends but do not benefit from Argentina’s leverage recovery, explaining why CAAP’s margin expansion outpaces peers despite higher sovereign risk.

• EM infrastructure flows have risen sharply since early November, and CAAP’s USD reporting structure moderates currency volatility relative to local currency peers.

📊 Valuation and Capital Health

• EV EBITDA at 8.38x trailing sits well below global airport operator averages of 10x to 12x.

• Free cash flow is accelerating as margins expand, supporting Florence, Armenia, and Baghdad capex.

• With $540M in cash and 0.9x leverage, CAAP is positioned for balanced capital allocation including potential shareholder return discussions once major capex phases are locked.

⚖️ Verdict and Trade Plan

Unambiguously bullish with disciplined realism. The operational leverage story is intact. Adjusted EBITDA, operating income, and margin expansion are validating the multi year thesis, while the expansion pipeline increasingly spans multiple high growth geographies.

Entry Zone: $22.10 to $22.60.

Stop: Below $20.80.

Base Target: $24.50.

Stretch Target: $26.00.

Catalysts: Q4 print, Florence groundbreaking sequence, Baghdad concession economics, Angola tender outcome, and macro driven EM infrastructure flows.

🏁 Conclusion

I am confident CAAP has entered its structural expansion phase. The margin acceleration is real, the balance sheet is exceptional, the pipeline is global, and the technical structure confirms accumulation.

📌 Key Takeaways

• Total revenue $527.3M including $55.2M construction.

• Adjusted EBITDA $194.3M with 41.2% margin.

• Operating income $147.0M, margin 27.9%.

• Net income $55.1M, up 275.2%.

• EV EBITDA 8.38x, materially discounted.

• Traffic 23.3M, up 9.3%.

• October traffic +10.2% confirms momentum.

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