Interesting Airport Stock

Have been wanting to own an airport stock for a while and hadn’t come across one at a decent price. Found a good one and thought I would share my findings: Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (OMA)(ADR:OMAB): OMAB operates 13 airports in Central and Northern Mexico. They are a “dual till” airports, in that they have an aeronautical sector where the prices are regulated (often at or slightly above inflation), and a non-aeronautical segment which includes fees from shops, parking, and an industrial park near one of the airports. Competitive moat: Airports naturally have extremely favorable economics. Generally speaking they are natural monopolies and demand is very price inelastic. Airport travel has increased for decades and I expect it to continue to do so. It is a virtual guarantee that their airports have more traffic 10 years from now, and in the past traffic has increased around 8% a year. Management: A big risk for Mexican companies is the pay structure for their CEOs tends to be mostly salary and short term incentives. This can create a misalignment with shareholders so you have to be careful. I won’t invest in a company in Mexico unless their CEO has a long track record. Fortunately OMAs CEO has been there since 2018, has shown a long term focus, and is in his late 40s so I expect him to be there for a long time. His biggest strength in my view is efficiency. There are three main publicly traded airport groups in Mexico and OMA has consistently been the most efficient in expanding margins. I also like his organic growth focus, where the other airlines have done more M&A. Segments: The aeronautical segment is attractive but cost increases are limited by the regulatory tariff system. This limits price increases but that is mitigated by OMAs efficiency and the consist increase in traffic over time. Where the business becomes really interesting is the non-aeronautical segment. OMA has strong pricing power in this segment as there is no regulation and they have full control over pricing. we have all experienced how high prices are in airports yet people still buy for convenience. I expect price increases above inflation for the foreseeable future. OMA also recently opened an industrial park and does a fair amount of cargo shipping. I view these as fairly small parts of the business but both nice potential bonuses long term. Valuation: In my opinion valuation is very approximate so I do not typically due in depth valuations. I use a 15% return threshold and I expect OMAs fcf to grow about 12% a year over the next 5-10 years. Over the past 10 years they have a fcf growth of over 13%. In short I think the companies stock price around $110 USD is about half price. Current FCF yield is just under 7%, in my view a 3% FCF yield is appropriate for this business. GAP, one of their competitors which I view as a less attractive business overall currently trades at around a 3% yield. Summarizes thesis, 10 years from now I expect: 1. OMA will have about twice the traffic it does now 2. Their margins will be higher 3. They will have the same standout CEO. Interested to hear critiques and feedback!