• What’s new

AOT calls for bids again for Duty Free Pick-up Counter (DFPC) concessions. Yesterday, AOT announced a second invitation for bids for the Don Muang Airport (DMK) DFPC concession. The company is offering 1 master concession contract with rights to operate the duty-free counters in DMK airport for 10 years and 3 months, from Oct 1, 2022 to Dec 31, 2032. AOT will sell the TOR documents from Jan 20 – 31. The tender submission deadline is Mar 13, presentation would be on Mar 16, and AOT would announce the winning bidder by 13:30 on Mar 17.

• Analysis

AOT will proceed with this auction even if there is only one bidder. The previous auction was cancelled because only one bidder (KPD) bought the TOR documents.

Expect limited impact from Don Muang pick-up counter concession. Looking at the worst-case scenario, at 5% revenue-sharing for the DMK pick-up counter, the combined net In-Airport DF and Off-Airport DF revenue due to AOT could reduce our target price by Bt0.6 per share.

• Action/ Recommendation

We maintain that AOT would be a prime beneficiary of recovering tourist arrivals in the long-term but it is facing several temporary headwinds: (i) potential implementation of PSC revenue-sharing rate payable to the Government of 10%, (ii) strong THB could dampen its concessionaires’ retail sales and make Thailand tourism more expensive than in neighboring countries. Maintain HOLD rating with a target price of Bt80.