Airports of Thailand

Airports of Thailand Plc (AOT)

Impressive traffic in June 2013. In June, AOT announced impressive passenger
movement growth at +20% YoY – the ninth month in a row where growth was in
double digits. In 9MFY13 (Oct 2012- June 2013), AOT’s airports passed through 21%
more passengers than in 9MFY12. Passenger growth contributed by low cost carriers
(LCCs) grew 35% YoY in June 2013 and 30% YoY in 9MFY13. This accounted for 31% of
AOT’s traffic in 9MFY13, up from 29% in 9MFY12.
Strong traffic momentum ahead. AOT’s traffic growth has been in the double digits
since FY2010 (with a hiccup in FY2012 from the floods), and we expect traffic
momentum to continue robust. Backing this is: 1) strong travel demand in regional
and domestic markets; 2) aggressive fleet expansion by airlines in Thailand; 3) capacity
expansion. AOT will reopen Terminal 2 at Don Muang in mid-FY2014, raising handling
capacity by 50% or 9mn passengers, at CAPEX of Bt3bn. It will also build a new terminal
at Phuket Airport, adding the ability to handle 4-5mn more passengers/year (+75%) in
early FY2014 at a cost of only Bt100mn. In the longer term, its Bt62bn expansion of
Suvarnabhumi (phase 2), raising capacity by 15mn to 60mn passengers/year, is on
track with targeted completion in FY2017. We note that we have not yet included
potential upside from additional concession revenue from the incremental commercial
area at the new terminals.
3QFY13F earnings. We estimate 3QFY13 net profit at Bt2.5bn, +246% YoY but –46%
QoQ. FX gains are estimated at ~Bt300mn, from: 1) a raise in hedging position on yendominated
loans to baht to 94.2% in mid-May from 78.3% at end-March 2013; 2) THB
appreciation against JPY through mid-May. We expect core earnings of Bt2.2bn, +26%
YoY but -32% QoQ, backed by: 1) strong passenger traffic, +19% YoY but -10% QoQ from
seasonality; 2) better cost control after the full opening of Don Muang airport.
4QFY13F earnings. We expect earnings to soften QoQ from seasonal bonus expenses.
However, its earnings should show growth YoY from continued strong passenger
traffic and continued benefit from the full opening of Don Muang airport.
Maintain BUY. We raise our 2013F earnings by 4% to reflect the increase in traffic and
FX gains in 3QFY13. We maintain our BUY with a new DCF PT of Bt200 (from Bt190).
Apart from solid traffic growth in the short to medium term, potential additional
concession revenue from the incremental commercial area at new terminals will be
another catalyst for the share price.