Limited Upside as We Initiate Coverage of Narrow-Moat Airport Operators Aena and Aeroports De Paris

We initiate on airport operators Aena and Aeroports de Paris, or ADP, with narrow moat and stable trend ratings. The moat ratings are underpinned by the companies' efficient scale, due to dominant positions in their local markets, and intangible assets stemming from long-term relationships with local governments and regulators. Our fair value estimates for Aena and ADP of EUR 140 and EUR 110 respectively, are trading in line with prevailing share prices and offer limited upside to investors. Income investors were traditionally attracted to the stable and predictable dividends both groups distribute, however we don’t anticipate dividends to return to precoronavirus levels as the focus will be on restoring balance sheets.