Show pageOld revisionsBacklinksBack to top This page is read only. You can view the source, but not change it. Ask your administrator if you think this is wrong. ======Aéroports de Paris (Groupe ADP)====== Aéroports de Paris (also known as [[Groupe ADP]]) is the French publicly listed company that builds, develops, and manages a global network of airports. Its crown jewels are the Parisian airports: [[Paris-Charles de Gaulle Airport]] (CDG), [[Paris-Orly Airport]], and Paris-Le Bourget. Think of ADP not just as a landlord for airlines, but as a multifaceted business orchestrating a massive economic hub. Its revenue streams are diverse, coming from regulated aviation fees (like landing and passenger charges), commercial activities (shops, restaurants, car parks), a substantial real estate portfolio, and consulting or management services for other airports around the world. The French state remains a significant [[Shareholder]], which brings both stability and potential political influence, a crucial factor for any investor to consider. For a [[Value Investing]] enthusiast, ADP represents a classic "infrastructure play" with high barriers to entry, but one that is also sensitive to global economic cycles and events. ===== The Business Model: More Than Just Runways ===== ADP's business is cleverly structured into several segments, making it far more resilient than a simple toll collector for airplanes. ==== Aviation Activities: The Core Engine ==== This is the traditional airport business. ADP charges airlines for using its infrastructure. Key revenue sources include: * Landing and takeoff fees (based on aircraft weight). * Aircraft parking fees. * Passenger fees (charged per person boarding a plane). * Security charges. These fees are often regulated by the government to prevent price gouging, which provides stable, predictable cash flows but also caps the upside potential. ==== Retail and Services: The Shopping Mall in the Sky ==== This is where the magic //really// happens for profitability. Once passengers are past security, they become a captive audience for ADP’s retail tenants. This segment includes revenue from: * Rents and revenue-sharing from duty-free shops, luxury boutiques, and restaurants. * Car parks, a surprisingly lucrative business. * Car rentals and other services. The metric to watch here is **sales per passenger**. The more ADP can entice travelers to open their wallets before they fly, the higher its margins. ==== Real Estate and International Ventures ==== ADP owns a vast portfolio of land and buildings around its Paris airports, which it develops into offices, hotels, and logistics centres. This provides a steady stream of rental income. Furthermore, Groupe ADP leverages its world-class expertise to invest in and manage airports globally, from Turkey to India. This international expansion diversifies its revenue away from a single geographic region. ===== A Value Investor's Perspective ===== How does a company like Groupe ADP stack up against value investing principles? It's a classic case of weighing a strong competitive position against significant risks. ==== The Moat: A Tale of Two Airports ==== ADP possesses a formidable [[Economic Moat]]. It's practically impossible for a competitor to build a new major international airport next to Paris. This creates a natural monopoly. * **Location, Location, Location:** Paris is a premier global destination for tourism and business, guaranteeing a high baseline of air traffic. * **High Barriers to Entry:** The cost, political will, and land required to replicate ADP's assets are astronomical. * **Network Effects:** As a major hub, CDG attracts more airlines, which in turn attracts more passengers, creating a virtuous cycle. ==== Risks and Headwinds ==== No moat is impenetrable. Investors should be wary of several key risks: * **Economic Sensitivity:** Air travel is highly cyclical. Recessions, pandemics (as seen with COVID-19), and geopolitical turmoil can decimate passenger traffic and, consequently, ADP's revenue. * **Government Influence:** With the French state as a key shareholder, political decisions can sometimes override pure business logic, affecting everything from development plans to [[Dividend]] policies. * **High Capital Intensity:** Maintaining and expanding world-class airports requires immense and ongoing [[Capital Expenditures (CapEx)]]. This can be a drag on [[Free Cash Flow (FCF)]], the lifeblood of a business from a value investor's standpoint. ===== Key Financial Metrics to Watch ===== When analysing ADP, forget the daily stock price noise and focus on these underlying business metrics: * **Passenger Traffic (PAX):** This is the fundamental driver of the entire business. Monitor the monthly traffic figures ADP publishes. An increase in PAX is the first sign of a healthy business. * **Revenue per Passenger:** This measures the effectiveness of the high-margin retail segment. Is ADP getting better at selling goods and services to its captive audience? * **EBITDA:** [[EBITDA]] (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a useful metric for infrastructure companies like ADP because it strips out the large, non-cash depreciation charges, giving a clearer picture of operational cash flow. * **Debt Levels:** Given the capital-intensive nature of the business, debt is a constant reality. Keep an eye on metrics like the [[Debt-to-Equity Ratio]] to ensure the company isn't overleveraged.