Listed Nok Air targets 20% annual growth

The company said the aviation industry’s outlook was positive during the three-year period and there had been no risk to threaten its growth so far. Clearly, there is more room to grow in air travel, especially in the huge demand in secondary cities nationwide, according to Patee Sarasin, the company’s chief executive officer. 

He projects Nok Air’s sales to grow by 40 per cent this year, equal to its increase in seat capacity. In the first quarter of this year, its net profit was Bt425.3 million on sales of Bt2.81 billion. 

Last year, net profit was Bt504.7 million on revenue of about Bt8.21 billion. In the past three years, its cabin factor has averaged 87 per cent, despite the flood crisis in 2011, and that rate is on the rise this year. It projects more than 5 million passengers, up from 4 million in 2012. 

Yesterday, the firm announced the appointment of SCB Securities Co as its lead underwriter for its SET flotation, and the other six underwriters – Finansia Syrus Securities, Maybank Kim Eng Securities (Thailand), Kasikorn Securities, Country Group Securities, Thanachart Securities, and RHB OSK Securities (Thailand). Siam Commercial Bank is its financial adviser.

The firm has floated 187.5 million shares priced at Bt26 each. However, the highest price was Bt28 per share at the book-building process and demand was around six times the number of offered shares. Given current market fluctuations and the company’s intention to offer good returns to both institutional and individual investors, it decided to set its price at Bt26 per share. 

At the final offered price, the price-to-earnings ratio is approximately 11.5 times based on analysts’ average profit projection this year. 

Of the total shares on offer, 57.5 per cent will be sold to institutional investors because of high demand and to minimise risk from market uncertainty, and the rest to small investors. The previous plan was for a 50:50 ratio between the two parties. 

In addition, Thai Airways International will hold about 39 per cent of the company, down from 49 per cent earlier. Patee said the board would remain independent in deciding Nok Air’s business plan. 

Patee said the funds to be raised would be spent on expanding its fleet. At present, it has 22 aircraft – 13 Boeing 737-800/400s, four ATR 72-200/500s, and five SAAB 340Bs. New ATRs will be added over the next few years to accommodate the plan to focus more on new secondary markets, which are a strategic service of the company.  

At present, the airline flies to secondary cities such as Nan, Chumphon, Roi-et, Buri Ram, Sakon Nakhon, Phrae, Mae Sot, Mae Hong Son, Loei, Nakhon Phanom and 

Nakhon Si Thammarat. The ATR is a small jet with 66 seats, suitable for short-runway airports. 

In September, Nok Air will also begin serving Mawlamyine, Myanmar, from Mae Sot, with one flight per day. Myanmar offers big business potential, but the company will be cautious because most of passengers are foreign, and the demand is not from local people. Over the next three or four years, the market is expected to improve. 

Patee said the company’s core market was still domestic. Expansion to new markets abroad will be done step by step. Before launching a new route, the firm will have to make sure of its profitability. The past has taught the company to be careful with such plans: It stopped flying to the Indian city of Bangalore because it was a money-loser.