Industrials

Report by Insight Investment Research

The shares have risen ~30% YTD (+75% 1Y), reaching Insight’s €75 SOTP-based TP. While recent tariff increases and the successful execution of a major capex programme have supported sentiment, the stock now trades at 8.2x 2026E EV/EBITDA (vs. 7.6x LT avg.) and looks overvalued vs. peers. Structural constraints persist, with Frankfurt’s majority state ownership, unionised workforce and insourced ground handling keeping EBITDA margins low. Aviation returns are weak, with NOPAT/RAB averaging just 3.2% in 2010-19 and only 5.4% by 2040E, still 120bps below Insight’s 6.6% WACC. Tariffs are expected to average just +2.0% p.a. through 2050E, despite high Aviation capex (€390m p.a.). With DPS resuming at only €1.0 in 2025E (1.3% yield), Insight has a Sell rating on the stock, preferring ADP (+70% upside), Aena (+55%) and FH Zurich (+55%).

Industrials

Report by Insight Investment Research

Near-term tariff rises at Frankfurt are insufficient to close the gap to its Allowed Reg. Return. Robert Crimes sees Aviation Returns (NOPAT/RAB) of only 3.1% in 2024E and 2.9% in 2025E, c.320bps below Insight’s WACC of 6.2%. In addition to insufficient tariff rises, there are 3 key factors to consider: 1) Weak traffic recovery (lowest of EU peers). 2) High wage rises above inflation (Frankfurt staff costs to rise c.€150m (+19%) in 2024-25E). 3) High expansionary capex. Robert has a Sell rating on the stock given the average upside of Insight’s Global Infrastructure coverage is significantly higher at nearly 100%. Buy rated peers include Aena (TP €369), ADP (TP €234) and Flughafen Zurich (TP CHF330).