Airports of Thailand

Airport of Thailand Plc (AOT)

Growth target matches our projection, overcrowding fixed continuously
According to the meeting yesterday, AOT has aimed that passenger volume
(of all airports) and flights in fiscal year 2013 (ended September) will grow
by 14.5%yoy and 19%yoy, respectively, matching our projection.
Overcrowding problem in airports is continuously solved with 2 methods
previously set. 1) For Don Muang Airport, Terminal 2 will be renovated in
B3bn limit (reopen in 2014) to increase capacity from previously 8.5 million
passengers per year (only Terminal 1) to 20 millions per year, which is
projected to support the growth of low-cost airlines in the airport for another
1-2 years. 2) For Suvarnabhumi Airport, Runway 3, a part of phase 2
contruction budget, will be built as a substitute runway in case 2 major
runways are under maintenance, while Suvarnabhumi phase 2 will be open in
fiscal year 2017. Project advisor has been appointed and the whole project is
now under a designing process. The auction and construction will start
around mid-2014.
- Plan to expand capacity for more passengers, boosting profit by 63%
We maintain net profit forecast of fiscal year 2013 at B10bn, rising 63% yoy,
after the company's flight and passenger volume growth goal and our
projection matched the direction in 8 early months of 2013 (ended May
2013), with growth in flight and passenger volume of 15.9% yoy and 21.4%
yoy, respectively. 2014 profit is projected to grow by 30.2% without
overcrowding problem. Though Suvarnabhumi Airport and Don Muang Airport
currently have capacity to support 53 million passengers, total passenger
volume in the end of 2013 is projected to reach 65 millions (15 millions in
Don Muang Airport; 50 millions in Suvarnabhumi Airport). However, it is
projected that the company would expand the capacity to 65 million
passengers in 2014. After the expansion, Don Muang Airport will be able to
support 20 million passengers, projected to support 2014 passenger volume
growth of 30%yoy to 20.5 million due to expansion in low-cost airline
businesses. Suvarnabhumi Airport, at the same time, is projected to support
55 million passengers in 2014 (10% yoy growth), exceeding its capacity of
45 millions by 22%, but it can actually support 30% above its capacity.
Thus, overcrowding problem is projected to really occur from 2016-2017 on,
prior to Suvarnabhumi phase 2 opening. In that time, AOT has planned
renovation of Don Muang Airport's Terminal 3, its last terminal, to increase
the capacity from 20 million passengers to 36 millions, projected to support
the growth of airlines that are active in Don Muang Airport, as well as to be a
back up plan to support some of exceeding passengers from Suvarnabhumi
Airport before the opening of phase 2 that can support up to 60 million
passengers from 2017 on.
- New FV at B195 reflects leaping growth, 25.8% upside
According to the solid overall growth, we keep DCF-based FV (9.7% WACC,
3.5% Terminal Growth) at B195, implying 24.2% upside. We reiterate "BUY".