ASUR's Regional Resilience: Navigating Mixed Traffic Data for Long-Term Upside

In May 2025, ASUR reported a 2.2% year-on-year decline in total passengers, signaling a challenging operating environment. Yet beneath the headline numbers lies a story of regional resilience and strategic opportunities that could position the company for sustained growth. From Puerto Rico's booming international travel to pockets of domestic recovery in Mexico and Colombia's untapped international potential, ASUR's portfolio reveals compelling catalysts to offset broader headwinds. Let's dissect the data and assess the investment case.

Puerto Rico: A Beacon of Growth in a Challenging Landscape

Puerto Rico emerged as ASUR's star performer in May 2025, with total passengers rising 1.3% year-on-year. The real driver? International traffic surged 10.5%, fueled by robust demand for tourism and business travel. San Juan Airport (LMM) recorded 1.15 million passengers in May, contributing to a 9.2% year-to-date increase, with international traffic up 18% and domestic up 8.2%.

This outperformance underscores Puerto Rico's strategic importance as a gateway to the Caribbean. The island's strong international connectivity, driven by Aerostar's efficient operations, positions ASUR to capitalize on post-pandemic travel rebound trends. Investors should note that 70% of Puerto Rico's traffic is international, making it a low-risk, high-reward segment with minimal domestic volatility.

Mexico: Domestic Recovery Pockets Offset International Declines

Mexico's 3% total passenger decline masks a divergent regional story. While international traffic fell 5.6%, domestic travel held relatively steady (-0.4%), with key airports like Merida (+4.2%) and Veracruz (+9.1%) driving resilience. These hubs are benefiting from business travel recovery and regional tourism, with Merida's international traffic rising 7.6%—a sign of growing cross-border demand.

However, the Cancun (-4.2%) and Cozumel (-16.2%) hubs faced significant declines, likely due to over-tourism and competition from emerging destinations. Yet even here, there's a silver lining: Tapachula's international traffic surged 100.7% year-to-date, reflecting untapped potential in southern Mexico's emerging markets.

Colombia: International Potential Outshines Domestic Struggles

Colombia's 3.4% total passenger decline was softened by a 6.7% jump in international traffic, led by Rionegro (+6.7%). Despite domestic traffic falling 6.1%, the year-to-date international growth of 13.5% highlights Colombia's long-term upside as a gateway to South America.

The Corozal airport stands out, with domestic traffic soaring 88.6% year-to-date—a testament to Airplan's ability to tap into underserved regional routes. While domestic challenges persist, Colombia's international performance suggests that strategic investments in connectivity and tourism infrastructure could unlock sustained growth.

Risks and Strategic Considerations

• Mexico's International Decline: Cancun's struggles reflect broader macro challenges, including rising travel costs and competitive pressures. Diversifying routes and improving airport efficiency will be critical.
• Colombia's Domestic Volatility: Weak domestic demand in hubs like Medellin (-7.7%) could strain margins unless traffic recovers.
• Geopolitical and Economic Uncertainty: Trade tensions and currency fluctuations in Latin America pose risks to regional travel demand.

Why ASUR Still Offers Upside

1. Asset Quality: ASUR's airport portfolio includes high-growth hubs like Merida, Veracruz, and Rionegro, which are less correlated to broader economic cycles.
2. Diversification: Puerto Rico's tourism-driven traffic and Colombia's international expansion provide buffer against regional downturns.
3. Long-Term Demand Drivers: Growing middle-class travel in Mexico and Colombia, plus Puerto Rico's status as a regional hub, align with secular trends in aviation demand.

Investment Thesis

ASUR's stock has underperformed peers amid the May traffic decline, but its regional resilience and strategic assets make it a compelling contrarian play. Key catalysts include:
- Merida and Veracruz becoming new domestic hubs.
- Tapachula's international growth signaling untapped markets.
- Puerto Rico's consistent international traffic driving steady revenue.

Recommendation: Buy ASUR on dips below $35/share. The stock trades at a discount to its peers (12x 2025E EPS vs. 15x industry average), offering upside as regional recovery takes hold. Monitor domestic traffic trends in Mexico and Colombia closely—sustained improvement could trigger a re-rating.

In summary, ASUR's mixed May data masks a narrative of regional strength and strategic opportunity. For investors willing to look past short-term headwinds, the company's diversified portfolio and growth catalysts position it to outperform in a selective market.