Airport Thailand

Airport Thailand Plc (AOT)

4Q12’s net profit beats expectation due to advance bonus provision

Passenger volume and total flights of AOT in 4Q12 (ending September 2012) recovered 2.6%qoq and 5.1%qoq, respectively. As a result, passenger service charge (43% of revenue) and landing charge (14% of revenue) increased respectively by 4.1%qoq and 1.8%qoq, thus making overall
service revenue rise 3.9%qoq to B7.9bn. At the same time,although operating expense has increased by 15%qoq, it is still lower than our estimate as bonus expense for FY2012 at 7.5
months has been booked in this quarter by only 2.5 months because AOT had made bonus provision in advance by 5 months. Consequently, norm profit in 4Q12 has softened only
9%qoq to B1.5bn, better than expected. Moreover, in this quarter AOT also had a FX gain of B30.7m, reversing from the loss in 3Q12. Accordingly, net profit in 4Q12 stood at B1.5bn,
improving 115.3%qoq, making net profit for FY2012 stand at B6.4bn, growing threefold yoy. Excluding extraordinary items, norm profit in FY2012 was B6.9bn, thriving 69.2%yoy.

Profit next year to grow from Don Muang space rental income and lower tax rate
As the high season is coming, we believe AOT’s revenue in 1Q13 (ending December 2012) will grow following increasing passenger volume. At the same time, cost of service tends to
decrease because there will not be a bonus expense like it was in 4Q12. Moreover, there will be an advantage from a return to recognize revenue after the reopening of rental space and duty
free area in Don Muang Airport since FY2013 for 10 years with income of B956m a year and the growth of 10% a year.Combining with decreasing corporate income tax, profit in 1Q13
would grow significantly from the prior quarter. As 4Q12’s earnings were better than projected, we revise up our profit forecast for FY2013 and 2014 by 18% and 20%, respectively. Under the new forecast, FY2013’s net profit would be B8.5bn,the growth of 31%, before increasing further by 26% to B10.7bn in 2014 (as detailed in the table on the next page).

2013’s fair value is B92.0, close to current share price. HOLD
New fair value, DCF, is B92.0. As the current share price has already been close to the fair value, we recommend only HOLD.