Airports of Thailand

Air traffic rebounded strongly in Dec BUY (maintained) Target Price: Bt52.00 Price (11/01/12): Bt48.75

Airports of Thailand Plc (AOT)

What's new? AOT yesterday reported air traffic numbers for Dec 2011—a muscular MoM rebound followed the end of the flooding in Bangkok. Passengers totaled 5,922,548 people, up by 19% YoY and 25% MoM, while aircraft movement increased by 6% YoY and 13% MoM to 39,968 flights. International passenger traffic dipped 4% YoY (but jumped 29% MoM). In contrast, domestic passenger traffic rose by 11% YoY and 20% MoM.

Comment: The rebound in air traffic numbers indicates a broad recovery across the Thai travel industry with the end of the flooding. Passengers in 1Q12 (Oct-Dec) totaled 16,477,463 people, flat YoY but down 3% QoQ. We, therefore, expect 1Q12 earnings to be flattish YoY and soften a little QoQ. As the waters have receded, we anticipate that air traffic statistics will sustain their current uptrend through January, driven by high season for tourism.

Action: The resumption of air traffic growth momentum should boost AOT's share price and its earnings will be sustained strong going forward (with scope for upside if passenger service charges [PSC] are increased). As such, we expect a further share price re-rating. The stock price normally ascends during high season—typically to a PBV of 1.0x (0.5SD above its long-term average PBV of 0.9x). Note that AOT is deeply discounted to regional peers—a YE12 PBV of only 0.9x versus an Asian average of 1.3x.