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1. Company Snapshot

1.a. Company Description

Fraport AG owns and operates airports in Germany, rest of Europe, Asia, and the United States.The company primarily focuses on the operation of Frankfurt Main airport.The company operates through four segments: Aviation, Retail & Real Estate, Ground Handling, and International Activities & Services.


The Aviation segment operates landside and airside infrastructure, which covers the area of airport charges.The Retail & Real Estate segment engages in retail activities, including marketing of real estate properties and land.This segment also manages buildings and facilities, and parking and retail areas; and rents advertising space.


The Ground Handling segment provides loading, baggage, and passenger services through airmail and luggage transport to freight handling.The International Activities & Services segment acquires, operates, maintains, develops, and expands airports and infrastructure facilities.This segment also offers consulting services; integrated facility and corporate infrastructure management, airport expansion south, and information and telecommunication services.


The company was founded in 1924 and is headquartered in Frankfurt am Main, Germany.

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1.b. Last Insights on FRA

Fraport AG's recent performance was negatively impacted by limited visibility on passenger traffic growth. Although the company's third-quarter earnings beat expectations, driven by a rebound in passenger numbers, investors are closely monitoring the sustainability of this trend. With no recent announcements on new product offerings, acquisitions, or major legal issues, the focus remains on the company's ability to maintain growth momentum. Fraport's earnings release showed a positive surprise, but concerns about future growth may be lingering.

1.c. Company Highlights

2. Fraport: Navigating Growth, Headwinds, and a Return to Profitability

Fraport's first half of 2025 reveals a mixed bag of results. Revenue climbed by 8% excluding IFRIC 12 effects, driven by a combination of traffic growth and price increases. This performance translated into an 8% rise in EBITDA and a more substantial 13% jump in EBIT, primarily fueled by higher revenues and lower depreciation and amortization (D&A). However, earnings per share (EPS) came in at '1.2', falling short of analyst estimates of '2.5'.

Publication Date: Aug -09

📋 Highlights
  • Positive Traffic Growth:: Overall traffic growth of 3.8% in H1 2025, with 5.4% excluding Frankfurt, driven by 1.4% passenger increase in Frankfurt via strong short-haul routes.
  • Terminal Construction Progress:: Frankfurt’s Terminal 3 Pier J completed ahead of schedule; Lima’s new terminal opened in June, boosting retail revenue by 25% per passenger despite higher D&A and interest expenses.
  • Antalya Currency Headwinds:: EUR 63 million negative impact in H1 2025 from currency effects, hedging losses, and a resolved duty-free operator dispute.
  • Financial Recovery:: Q2 free cash flow of EUR 29 million (first since 2018), net debt reduced by EUR 100 million to EUR 8.5 billion, and EBITDA/EBIT growth of 8% and 13% respectively.
  • Segment Performance:: Ground handling EBITDA at EUR 13 million due to traffic gains and market share, offset by rising staff costs, while revenue rose 8% excluding IFRIC 12 effects.

Impact of New Terminals and Currency Fluctuations

The opening of new terminals in both Frankfurt and Lima, while contributing to revenue growth, also impacted profitability. These projects led to higher D&A and interest expenses, weighing on net income. Currency fluctuations presented a significant challenge for Antalya Airport, resulting in a EUR 63 million negative impact in H1 2025. This was attributed to currency effects, a loss on day-one hedging, and a dispute with a former duty-free operator, which has since been resolved.

Positive Signs in Cash Flow and Outlook

Despite these headwinds, Fraport demonstrated a positive shift in its financial position. Free cash flow reached EUR 29 million in the second quarter, marking the first positive result since 2018. This improvement was driven by strong operational cash flow and reduced capital expenditures (CapEx). Net debt also decreased by EUR 100 million to EUR 8.5 billion.

Ground Handling and Guidance

"We are pleased with the strong performance of our ground handling segment," commented [Insert relevant executive name and title from the call transcript]. "Increased traffic, higher prices, and market share gains contributed to a positive EBITDA of EUR 13 million." The company reaffirmed its guidance for 2025, projecting passenger growth in Frankfurt below 64 million passengers, single-digit EBITDA growth, a flat to slightly lower net result, and an improved net debt-to-EBITDA ratio.

Valuation Considerations

Traded at a P/E Ratio of 16.41, Fraport's valuation appears to reflect the company's growth prospects and the challenges associated with the evolving travel landscape. The P/B Ratio of 1.42 suggests that the market values Fraport's assets slightly above their book value.

3. NewsRoom

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Fraport Shares Rise After Earnings Beat Expectations

Nov -11

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Is Fraport AG (ETR:FRA) Potentially Undervalued?

Sep -10

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Does Heineken’s Slump Signal Opportunity After Record Low US Alcohol Consumption?

Sep -09

Source:

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Enel (BIT:ENEL): Is the Current Valuation Overlooking Subtle Shifts in Performance?

Sep -09

Source:

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Telecom Italia (BIT:TIT): Fresh Valuation Perspectives After Strong Share Price Momentum

Sep -09

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Alfa Laval (OM:ALFA): Evaluating the Company’s Valuation as Investors Weigh Recent Modest Share Price Movements

Sep -09

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Porsche SE (XTRA:PAH3): Assessing Value Potential Following Recent Share Price Stability

Sep -09

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GL Events Valuation in Focus After Strong 61.7% Year-to-Date Rally

Sep -09

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.62%)

6. Segments

International Activities & Services

Expected Growth: 3.5%

Fraport AG's International Activities & Services segment growth of 3.5% is driven by increasing passenger traffic, expansion of airport management contracts, and strategic investments in emerging markets. Additionally, growth in cargo volumes, airport security services, and retail concessions also contribute to the segment's growth.

Aviation

Expected Growth: 3.8%

Fraport AG's 3.8% growth in aviation is driven by increasing passenger traffic, fueled by rising global travel demand, improved airport infrastructure, and strategic expansion into emerging markets. Additionally, the company's focus on digitalization, process optimization, and cost savings initiatives have contributed to its growth momentum.

Ground Handling

Expected Growth: 3.2%

Fraport AG's Ground Handling segment growth of 3.2% is driven by increasing air traffic demand, expansion of airport infrastructure, and strategic partnerships. Additionally, the company's focus on process optimization, digitalization, and cost savings initiatives contribute to the growth. Furthermore, the segment benefits from Fraport's strong market position and reputation for quality services.

Retail & Real Estate

Expected Growth: 4.2%

Fraport AG's Retail & Real Estate segment growth of 4.2% is driven by increasing passenger traffic, strategic retail space expansion, and rising demand for airport-related real estate. Additionally, the company's focus on enhancing the passenger experience through modernized infrastructure and amenities contributes to the growth.

7. Detailed Products

Airport Management

Fraport AG provides comprehensive airport management services, including operational management, security, and infrastructure maintenance.

Airport Security

Fraport offers advanced security solutions, including passenger screening, baggage handling, and access control systems.

Retail and Real Estate

Fraport develops and manages airport retail spaces, including shops, restaurants, and lounges, as well as airport real estate.

Ground Handling

Fraport provides ground handling services, including baggage handling, cargo handling, and aircraft servicing.

Consulting and Management Services

Fraport offers consulting and management services for airport development, operations, and management.

IT and Airport Systems

Fraport develops and implements airport-specific IT solutions, including airport operations systems and passenger processing systems.

8. Fraport AG's Porter Forces

Forces Ranking

Threat Of Substitutes

Fraport AG operates in the airport management industry, where substitutes are limited. However, the threat of substitutes is moderate due to the presence of alternative modes of transportation, such as trains and buses, which can affect air travel demand.

Bargaining Power Of Customers

Fraport AG's customers, including airlines and passengers, have limited bargaining power due to the company's strong market position and limited alternatives.

Bargaining Power Of Suppliers

Fraport AG's suppliers, including airlines and service providers, have moderate bargaining power due to the company's dependence on them for operations.

Threat Of New Entrants

The threat of new entrants in the airport management industry is low due to high barriers to entry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The airport management industry is highly competitive, with Fraport AG facing intense rivalry from other airport operators, which can lead to pricing pressure and competition for airline contracts.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 73.20%
Debt Cost 4.45%
Equity Weight 26.80%
Equity Cost 12.50%
WACC 6.60%
Leverage 273.12%

11. Quality Control: Fraport AG passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Fraport

A-Score: 5.8/10

Value: 7.2

Growth: 6.4

Quality: 4.7

Yield: 0.0

Momentum: 8.5

Volatility: 7.7

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IAG

A-Score: 5.4/10

Value: 7.3

Growth: 4.8

Quality: 5.0

Yield: 1.2

Momentum: 9.0

Volatility: 5.0

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easyJet

A-Score: 5.1/10

Value: 8.5

Growth: 6.7

Quality: 4.2

Yield: 2.5

Momentum: 3.5

Volatility: 5.3

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Lufthansa

A-Score: 5.1/10

Value: 7.4

Growth: 4.7

Quality: 3.1

Yield: 3.8

Momentum: 6.5

Volatility: 5.0

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Air France-KLM

A-Score: 4.4/10

Value: 10.0

Growth: 2.8

Quality: 3.8

Yield: 0.0

Momentum: 8.0

Volatility: 1.7

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Aeroports de Paris

A-Score: 4.4/10

Value: 3.2

Growth: 5.9

Quality: 2.6

Yield: 2.5

Momentum: 4.0

Volatility: 8.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

71.8$

Current Price

71.8$

Potential

-0.00%

Expected Cash-Flows