TAV Airports: A Toll Bridge In The Sky

2025-05-28 05:31:04 ET

Summary

• TAV Airports benefits from high inflation in Turkey and Kazakhstan, as most of its revenue is in hard currencies while many costs are in local currencies.
• The company's core business model involves long-term airport operating rights, providing stable cash flows and a durable competitive moat.
• With major investments recently completed, TAV is entering a low-capex phase that should boost free cash flow.
• New contracts with higher airport fees, and expanded capacity following the current investments position TAV for strong, margin-accretive revenue growth.
• I think TAV is a great example of the legendary investor, Charlie Munger's strategy: buying a wonderful business at a fair price.

Investment Thesis

I was born and raised in a country with an extremely high inflation, which made me thoughtful about the effects of inflation on businesses operating in such an environment. Most businesses struggle to survive and keep up with the rapid pace of inflation. However, there are few businesses for which inflation acts as a tailwind rather than a headwind. One example is companies with the majority of their revenues are generated in stronger currencies like euro or dollar, while many of their costs are incurred in the local currency. These companies represent great opportunities for investors....

Read the full article on Seeking Alpha

For further details see: