ADP: discounted share sale belies relative strengths

{"text":[[{"start":12.29,"text":"The easiest way to fly green? "},{"start":14.581999999999999,"text":"Take the train instead. "},{"start":16.149,"text":"Soon travellers in France will not have a choice. "},{"start":18.854,"text":"Domestic flights of two and a half hours or fewer will be outlawed under new emissions rules. "},{"start":23.671999999999997,"text":"But investors need not fear for Parisian airports owner ADP which has instead staked its future on international travel. "}],[{"start":30.64,"text":"Its shares blipped on to traders’ radars on Tuesday when Schiphol Group, the Amsterdam airport owner, sold its 3.9% ADP stake one-tenth below market prices. "},{"start":40.582,"text":"Its shares plummeted more than 12 per cent. "}],[{"start":43.63,"text":"ADP owns and operates the important Charles de Gaulle and Orly airports in Paris. "},{"start":48.597,"text":"Traffic in the first nine months of this year remained about 15 per cent below 2019 levels. "},{"start":53.964,"text":"Lockdowns in China explain why lucrative Asia-Pacific routes remain far more subdued. "}],[{"start":59.980000000000004,"text":"As for the French domestic flight ban, that will be limited, says Henk Ombelet of consultancy Cirium. "},{"start":66.047,"text":"Only three routes will be affected in total, all from ADP’s Orly airport, which accounted for just 3 per cent of traffic in 2019. "}],[{"start":74.2,"text":"ADP shares had been cruising. "},{"start":76.604,"text":"Over the past two years it had outpaced the MSCI all world transport infrastructure sector index. "},{"start":82.159,"text":"Before Tuesday’s drop its enterprise value to ebitda ratio traded at a 30 per cent premium to listed regional rivals. "},{"start":89.589,"text":"Its multiple has descended to a more palatable 12 times. "}],[{"start":null,"text":"

"}],[{"start":93.41,"text":"The Paris group’s lower reliance on European travellers explains the remaining premium. "},{"start":98.402,"text":"At Spanish rival Aena 90 per cent of passengers originate from the continent. "},{"start":102.744,"text":"That means more exposure to the local economic cycle and to stricter EU environmental rules for flights. "}],[{"start":109.16,"text":"Meanwhile, ADP’s stakes in Turkish and Indian airport operators diversify its revenues further with some potential for growth; a third of profits will come from outside of Europe by 2025, thinks Jefferies, up from a quarter. "},{"start":121.814,"text":"ADP shrewdly managed to buy these stakes during a period of low interest rates. "}],[{"start":126.64,"text":"On analyst estimates, ADP offers a free cash flow yield of 3 per cent annually on average out to 2025. "},{"start":133.657,"text":"That still beats that from French government debt. "},{"start":136.274,"text":"This air pocket drop offers an opportunity for those anticipating a recovery in global air travel next year. "}],[{"start":141.99,"text":""}]],"url":"https://creatives.ftacademy.cn/album/92113-1670387846.mp3"}