The Nation



Airports of Thailand

Only short-term impact from politics, China BUY

Airports of Thailand Plc (AOT)

Event: We attended an analyst meeting yesterday, presented by Khun Sita Divari, Chairman, Khun Makin Petplai, President and Khun Poolsiri Virojanapa, CFO.


- Slow passenger growth in December. AOT reports passenger growth of 4% YoY in the first 10 days of December, down from 10% YoY in November 2013, hit by local politics and fewer Chinese tourists without zero dollar tours. AOT sees these as only short-term issues and holds a long-term positive view on growth of Chinese tourists, particularly after Thai and China governments eliminate the visa requirement for travel between the two countries, expected in 2014.

- Expansions are on track. To keep up with rising passenger numbers, AOT is in the process of expanding capacity at major airports.

- The Bt62bn expansion of Suvarnabhumi (phase 2), raising capacity by 15mn to 60mn passengers/year, is now being designed and is on track to meet the target completion date of 2017. Of the total project funding of Bt62bn, Bt45bn, or ~70%, is expected to be financed by internal cash.

- A portion of the Bt5.8bn expansion of Phuket airport (phase 2) that will double capacity to 12.5mn from 6.5mn passengers/year will open by mid-2014. To handle the steady climb in passenger numbers before Phuket airport (phase 2) finishes, AOT is building Terminal-X. This will make it possible to process 4-5mn more passengers/year at a cost of only Bt155mn; completion in 2014.

- Bt10.7bn in renovations at Don Muang: 1) The Bt3.4bn renovation of Terminal 2, doubling capacity to 32mn passengers/year, will be completed and the terminal reopened in May 2014. 2) The Bt7.3bn renovation of the Domestic Terminal and contact gate for A380 planes will be completed in January 2016.

- Update on PSC. AOT says the increase in passenger service charges (PSC) is still waiting for approval by the Department of Civil Aviation (DCA) committee. Since there is now going to be new elections, progress is not expected until early 2014.

Maintain BUY with mid-14 DCF-based TP of Bt235/share. In the near term, AOT's share price should be under pressure by the concerns that the absence of zero-dollar tours from China plus the political impasse in Thailand will drag down passenger growth. Assuming no worsening in the political situation, we stand by our long-term positive view on AOT. We base this on: 1) continued strong demand in regional and domestic markets; 2) expansion at congested airports, i.e. Phuket and Don Muang (Terminal 2); 3) aggressive fleet expansion by airlines in Thailand (i.e. THAI, AAV, NOK, and a new airline, Thai Lion Air) and 4) upside from additional concession revenues from more terminals in FY2014. AOT has announced a Bt4.6 DPS, or 3% dividend yield. XD will be December 19, 2013 with payment on February 6, 2014.

Comments conditions

Users are solely responsible for their comments.We reserve the right to remove any comment and revoke posting rights for any reason withou prior notice.