AOT - Waiting for clarity (TP Bt66.0, NEUTRAL)
(10/04/2018 - 08:50)
กลุ่มอุตสาหกรรม ขนส่งและโลจิสติกส์
หุ้น AOT
มูลค่าพื้นฐาน 66.00
คำแนะนำ HOLD
  • Expect 2QFY18F core profit to grow 15% yoy to a new high of Bt7.4bn thanks to 12% higher international passenger volume
  • TOR for new concession contract should be finalized by 3Q18; soon to know if proposal to manage provincial airports is accepted
  • NEUTRAL, higher DCF-based TP of Bt66 implies 37x FY18F PE; wait for details of airport management and Airport City projects

 

Higher passenger volume should lead to higher margin

We expect 2QFY18F (Jan-Mar) revenue to grow 11% yoy. Passenger service charge should increase 11% yoy as domestic passenger volume grew 3% and international volume grew 12% driven by tourists from China (+30% yoy), Russia (+27% yoy) and India (+20% yoy). Concession revenue should also increase 15% as strong international volume should drive up sales volumes at retail and duty free outlets. Operating profit margin should improve 1.5ppt yoy to 56.4% thanks to high operating leverage. Hence, 2QFY18F core profit should reach a new high of Bt7.4bn (+15% yoy, +19% qoq).

 

Awaiting three new catalysts

AOT’s share prices already reflect its strong operation, but investors are waiting for clarity on three new catalysts: (i) AOT has proposed to the transport ministry to operate at least 15 provincial airports that are currently operated by the DOA. The result should be out soon. However, the collective profit at under Bt1.0bn would not have an immediate impact to share prices. (ii) Airport City project (PPP) to develop commercial areas on two plot of land – c.500 rai within Suvanabhumi Airport (leasehold) and c.700 rai outside the airport (freehold). The TOR (Term of Reference) for the 500-rai project should out soon. (iii) TOR for bidding of the new concession contract (FY21-30) for Suvanabhumi Airport will be finalized by 3Q18, after a delay from June. A bidding war could push up our TP to Bt68-74/sh (see our report dated 15 Feb 2018).

 

Trading at 53% premium to regional peers

Although earnings should reach a new high in 2QFY18F, we remain NEUTRAL on AOT because valuation is expensive at 39x FY18F PE vs regional peers’ average of 26x, and at +2SD of its 10-year average of 24x. We would wait for material developments in the above or switch to CENTEL (OUTPERFORM, Bt54/sh) which is trading at 31x FY18F PE to capture Thailand’s strong tourism sector.