Airports of Thailand

Airports of Thailand Plc (AOT)

What’s new? AOT yesterday reported impressive air traffic numbers for August—6.5m passengers (up by 13% YoY and 5% MoM) and total aircraft movement of 41,603 flights (up by 8% YoY and 1% MoM). International passenger traffic increased by 11% YoY and 3% MoM, while domestic passenger numbers rose by 16% YoY and 9% MoM.
Strong traffic growth: August 2012 passenger traffic growth (13% YoY and 5% MoM) exceeded the historical mean for August (9% YoY and 4% MoM).
Expect YoY & QoQ growth in 4Q12 air traffic: Total passenger numbers in 4Q12-to-date (July-Aug) rose by 10% YoY to 12.7m people. Even though we expect Sept passenger traffic to soften MoM, due to seasonality, we still anticipate YoY growth. As such, AOT’s 4Q12 (July-Sept) air traffic numbers are should rise both YoY and QoQ—July-Sept air traffic is normally greater than April-June traffic.
In addition, AOT's 11M12 passenger traffic growth was 7.8% YoY. The firm looks set to comfortably achieve its FY12 target range of 7-8% growth.
Action: We think that the upcoming Oct-Dec tourism high season will be a share price catalyst going forward. Moreover, there is scope for upside to our AOT earnings forecast and target price from: 1) additional concession revenue at Don Mueang Airport (about Bt956m/year, equal to 3% of AOT's top-line), 2) increases to Passenger Service Charges (PSCs) (subject to the approval of the Civil Aviation Commission) and 3) a potential rise in passenger numbers, to be brought about by the relocation of low-cost carriers to Don Mueang Airport.
We, therefore, maintain our TRADING BUY rating. Based on our current earnings projection, AOT trades at a YE12 PBV of 1.3x (1.5SD above its long-term average of 0.9x), roughly level with the regional mean.