Corporacion America Airports CAAP Trung Nguyen 17 May

Overview + A different kind of value investments that we usually go for +

Background • Ticker: CAAP – Market. Cap: 1. 8 B Price: $11/share – Number

Background • Largest private airport operator in the world by number of airports (52)

Revenue vision • • Page 51 of the 20 -F lists all concessions and

FY 2017 financials • Revenue: $1. 6 B ($1. 37 in 2016) 15% growth

What we like • Unique business model, theoretically, demonstrates wide moats – Ability to

What we don’t like • Capex is difficult to trust – CAAP build airports

But… • CAAP can: – Raise prices – Half of its debt is in

Action or Inaction (usually better) • Do more research!! • Invest if you… –

Contacts Seeking Alpha – DTF Capital Performance sinception (April 2017) is 29% www. dtfcapital.

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Corporacion America Airports (CAAP) Trung Nguyen 17 May 2018

Overview + A different kind of value investments that we usually go for + Usually ends up in the too hard to learn + But we wants to explore globally. CAAP represents an interesting long-term investment

Background • Ticker: CAAP – Market. Cap: 1. 8 B Price: $11/share – Number of shares: 160 M Float: 32 M – Insider: 82% (owns by Eurnekian family) – Fairly illiquid for a 1. 8 B market cap • Recent IPOed in Feb 2018 on NASDAQ – Aimed to raise $1 B at $20/share, ended up with $196 M and now at $11/share

Price chart

Background • Largest private airport operator in the world by number of airports (52) and 10 th in therms o passenger traffic (76 M) • Expanding globally but core market remains Argentina and Brazil

Revenue split

Revenue vision • • Page 51 of the 20 -F lists all concessions and when they expire. http: //bit. ly/2 Ip. T 7 Gy Average remaining life is 14 year, with 8 year extendable. Argentinian expire in 10 years and renewable.

FY 2017 financials • Revenue: $1. 6 B ($1. 37 in 2016) 15% growth • Operating Costs: $1. 2 B ($1 B in 2016) 17% growth (70% is cost of services and construction SG&A increase is 13%) • EBITDA: $460 M • CAPEX: $280 M • LT Debts: 1. 4 B (highly levered)

What we like • Unique business model, theoretically, demonstrates wide moats – Ability to raise prices with inflation – Ability to reduce CAPEX in downturn – Once invested, enjoy high margins • Valuation is low – Currently 7 x EBITDA, 10 x FCF – European airports are 14 x-20 x EBITDA – Mexican airports are 10 x-12 x EBITDA • Growth potential – New flight routes (Brazil/Argentina), new airports (Italy), new runway

What we don’t like • Capex is difficult to trust – CAAP build airports rather than just buying leases on preexisting properties – Over-budget, delays are the norm • Levered balance sheet – $1. 4 B Long-term debt • Latin America economies are edgy – Pesos down 30% YTD – Inflation 25%, (41% in 2016, and 31% in 2015) – Support for the capitalist President Mauricio Macri is waning (aimed for 15% inflation…) – Massive drought risk… – Airports are exposed to this kind of noise…so sentiment isn’t easily cleared.

But… • CAAP can: – Raise prices – Half of its debt is in Pesos, so real value of debts and interest payment decreases – 40% of revenue is other currencies, or denominated in USD!

Growth drivers +1

Action or Inaction (usually better) • Do more research!! • Invest if you… – Believe Argentina economy will recover (otherwise its a refinancing risk to CAAP) – Air traffic to countries CAAP operates grow – Peso is at the bottom? ? ? – If you believe EBITDA will expand as Capex cycle is done. – Other growth prospects (Entrance of low cost carriers, lifting of aviation regulation)

Contacts Seeking Alpha – DTF Capital Performance sinception (April 2017) is 29% www. dtfcapital. co. uk (under maintenance till next week)