Airports of Thailand

Airports of Thailand Plc (AOT)

Impressive traffic in Mar 2013. Yesterday, AOT announced impressive traffic growth for March 2013, reflecting passenger growth of +21% YoY and aircraft movement growth of +15% YoY. Providing this was strong domestic and international tourist arrivals, mainly from China, Russia, India and Japan. In 6MFY13 (Oct 12-Mar 13), AOT’s airports passed through 23% more passengers and 16% more aircraft than in 6MFY12.

2QFY13F net profit Bt4.2bn. We estimate a new high for 2QFY13 net profit of Bt4.2bn, +40% YoY and +23% QoQ. In terms of extra items, AOT will record FX gain of Bt1.2bn on its yen-denominated loans thanks to a THB appreciation against the JPY of 12%. Core earnings are expected to be solid at Bt3bn, +29% YoY and 38% QoQ, from stronger passenger (+15% YoY and +7% QoQ) and aircraft (+17% YoY and +11% QoQ) movement plus better cost controls after the full reopening of Don Muang in Oct 2012.
3QFY13F outlook. We expect its 3QFY13 earnings to be stronger YoY, largely from a FX gain as the baht continues to appreciate against the yen at 7% so far in 3QFY13 (+Bt700mn, not yet included in our earnings) and continued strong traffic (+10% YoY during Songkran festival, based on TAT forecast). However, on a QoQ basis, earnings will slip as the country enters its low season for tourism.
Maintain BUY. We revise up its FY2013 earnings by 14% to reflect the stronger-than-expected traffic and FX gain in 2QFY13F. In response to our earnings revision, we raise our DCF-based PT to Bt160 (from Bt140). We like AOT for its strong earnings momentum in the near term, backed by robust traffic movement and FX gain from the continued THB appreciation against the JPY. Longer term, AOT will be a major beneficiary of the planned aggressive fleet expansion by airlines in Thailand.