Airport of Thailand
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Plan B for delayed phase 2 BUY
Airport of Thailand Plc (AOT)
Suvarnabhumi phase 2 project has been delayed. However, AOT has planned to build a
new terminal valued B20bn to support growth in passenger volume for the next three
years. If the plan is approved by the cabinet, we might revise up the fair value.
- Plan B for delayed phase 2
Suvarnabhumi phase 2 project (valued B62bn, expanding capacity from 45
million passengers/year to 60 million passengers/year) has been delayed from
the original plan (starting in 2015, opening in 2018) under the Public Account
Committee's (PAC) deliberation. In order to support continuous growth in
passenger volume (growing by 12% on average in 2009-2013, currently 50
million/year), a new terminal (international and domestic) valued B20bn
would be built on the land to the north of the current terminal (revising the
old plan, initially intended to use the land for a new domestic terminal). The
new terminal is expected to increase the capacity by 15-20 million
passengers/year. The plan will be presented to the cabinet for deliberation in
late 2014. The auction and the construction will start in 2015, and the
terminal will start its commercial run in 2017. This terminal will have 10
attached bays, while Suvarnabhumi phase 2 will have 28 attached bays.
- New project to mitigate the problem, but could not replace the phase 2
The new plan would relieve overcrowding problem for the next three years
(under the assumption that passenger volume grows by 12% on average and
the current phase can support 60 million passengers/year at best). However,
overcrowding problem would continue after the aforementioned period, which
means AOT still needs to invest on Suvarnabhumi phase 2. The new terminal
plan costs lower than the phase 2 plan, lowering depreciation expense and
interest expense because loan is not required. AOT’s financial position is
currently net cash, and it can generate almost B20bn/year cash from
operating. Under the new plan, AOT’s profit at the beginning of the project
(2015-2017) would grow continuously compared with the old plan (phase 2)
that would cause lower profit growth during the same period
- Waiting for clarity on new plan before revising up fair value
This new plan would not be included in our forecast unless it is approved by
the cabinet. We still maintain our assumption that AOT's growth is supported
by Suvarnabhumi phase 2. If the conclusion on the new plan is made, we
might revise up AOT's earnings forecast and fair value. For now, we maintain
the fair value at B265, reiterating BUY.
