Airports of Thailand

Transcription

1 OSK Research PP10551/09/2013 (032829) 15 Feb 2013 THAILAND EQUITY Investment Research Daily Buy Target Previous Price Airport Develop/Maint THB THB137 THB133 THB117 Airports of Thailand is the airport operator of 6 major airports in Thailand Stock Statistics Bloomberg Ticker Market Cap AOT TB THB166,428m USD5,579m 52 wk H/L price (THB) m ADT THB343m YTD Returns 19.8% Beta (x) 1.01 Major Shareholders (%) Finance Ministry 70.0 Thai NVDR 4.5 Social Security Force 1.3 Share Performance (%) Month Absolute Relative 1m m m m month Share Price Performance Feb Apr-12 Source: Bloomberg Price Close 19-Jun-12 Relative to Stock Exchange of Thailand Index (RHS) 20-Aug Oct Dec QFY13 Results Review Airports of Thailand Strong Showing With More To Come AOT reported a strong 1QFY13 core net profit of THB2.165bn (+66% y-o-y, +41% q-oq), in line with our and street estimates. Its 26% y-o-y revenue growth was driven by strong passenger growth and a higher mix of international passengers. Despite higher operating costs in DMK following the relocation of low cost carriers from BKK, overall margins expanded due to its high operating leverage. We raise our earnings for FY13-FY15 by 1%-3% on anticipation of stronger traffic projections as we expect earnings over the coming quarters to remain strong. We raise our FV to THB137 (from THB133), based on an unchanged EV/EBITDA multiple of 11.5x. Maintain BUY. Core EBIT and PBT in line. AOT reported decent results in 1QFY13, with a net profit of THB3.432bn (y-o-y: +173%, q-o-q: +122%) on the back of THB8.6bn in revenue (y-o-y: +26%, q-o-q: +9%). Net exceptional items amounted to THB1.266bn, which included a hefty THB1.316bn gain from the unrealized forex gains from its JPY-denominated borrowings. Stripping off these exceptional items, core net income for the reporting quarter came in at THB2.165bn (y-o-y: +66%, q-o-q: +41%), in line with our and consensus forecast but missing our earlier 1QFY13 earnings preview of THB2.81bn due to the higher tax it had incurred in the quarter. Nonetheless, we deem the results to be within our expectations as 1QFY13 core net profit accounted for 23% of our full-year forecast. Impressive topline growth. AOT s 26% y-o-y revenue growth was driven by the 41% y-oy spike in Passenger Service Charge (PSC) collected on the back of a 30% y-o-y growth in passenger movements. Moreover, the higher mix of international passengers raised its average PSC/pax by 8% y-o-y and 1% q-o-q. Following the relocation of low cost carriers (LCCs) to DMK (Don Mueang Airport), AOT was able to fetch higher concession revenues, as anticipated overall concession revenue grew by 39% y-o-y and 10% q-o-q. We were earlier concerned that the LCCs move to DMK could adversely affect the concession revenue collected from BKK (Suvarnabhumi Airport) but there had been no signs of slowdown at the latter given the higher spending power of passengers flying on full service carriers there. Forecasts and Valuations Sep-11 Sep-12 Sep-13F Sep-14F Sep-15F Total turnover (THBm) 28,641 30,472 36,755 40,485 47,149 Recurring net profit (THBm) 4,008 6,892 9,358 10,737 13,797 Recurring net profit growth 108.8% 71.9% 35.8% 14.7% 28.5% Core EPS (THB) Core EPS growth 108.8% 71.9% 35.8% 14.7% 28.5% DPS (THB) Dividend Yield 0.7% 1.5% 2.2% 2.6% 3.3% Core P/E (x) Return on average equity 3.1% 8.7% 11.6% 12.4% 14.7% P/B (x) EV/EBITDA (x) Net debt to equity 50.7% 31.8% 17.6% 11.4% 8.5% OSK vs consensus EPS 9.1% 4.4% 15.2% Source: Company data, OSK Research estimates OSK Research See important disclosures at the end of this report 1

2 OSK Research PP10551/09/2013 (032829) 15 Feb 2013 Parking and landing fees revenue dip by 10% y-o-y. We note that revenue could have been better if not for the discounts for LCCs in DMK, an incentive scheme offering a 30% discount on airport related services granted to carriers that had opted to move out from BKK. This has caused AOT s average landing and parking fee per aircraft dropping by 23% y-o-y and 13% q-o-q respectively. Similarly, average service revenue per aircraft also dipped by 5% y-o-y. High operating leverage bumps up margins. AOT s overall operating costs rose by 22% y-o-y due to higher utilities costs incurred following the relocation of the LCCs to DMK and higher manpower costs due to the hiring of more temporary staff, who were also more expensive to hire following the minimum wage ruling. Despite the steeper costs, overall EBITDA margins improved by 1.4ppts to 55.88%, thanks to its high operating leverage. Depreciating JPY lowers net debt. AOT s total debt dipped from THB56.6bn in FY12 to THB49.8bn in 1QFY13 due to weaker JPY against the THB the JPY depreciated by 13% during the reporting period. With its growing cash pile at THB33.2bn, total net debt has been reduced to THB16.6bn from THB24.5bn in FY12. To some extent, the depreciating JPY had also reduced interest expense, which came in lower by 9% y-o-y and 3% q-o-q. Better earnings seen for the seasonally stronger 2Q. With the seasonally stronger passenger numbers expected in 2Q, AOT s resilient earnings momentum will continue to hold, thanks to Thailand s strong tourism appeal. Slight earnings upgrade. We raise our earnings estimates for FY13-FY15 by 1%-3% (see Figure 1 on page 4) as we nudge up our revenue numbers by 2% in anticipation of stronger traffic and higher mix of international passengers, which will lift AOT s concession revenue. We now forecast higher FY13 passenger growth of 16.3% from 12.8% earlier while the growth numbers for FY14 and FY15 are maintained at 8.3% and 6.8% respectively. We have also toned down our revenue contribution from aircraft-related aeronautical revenue due to the discounts in DMK and adjusted our staff costs upwards. We have also made some housekeeping changes on AOT s balance sheet components, factoring in the decline in the loan value of its JPY-denominated borrowings, thus further reducing its total net gearing position from 31.8% to 17.6%. BUY. Higher FV of THB137. Premised at an unchanged EV/EBITDA multiple of 11.5x, which is a 10% premium to peer valuation, we raise our FV to THB137 (from THB133) with our BUY call maintained. The higher FV reflects our 1% earnings forecast upgrade and lower net debt. The premium in EV/EBITDA multiples is justified, given Thailand s tourism appeal coupled with AOT s high free cash flow earnings despite the onerous capex to be incurred over the coming years. Our DCF-derived FV is also raised from THB117 to THB135 based on a WACC of 8.2% at a terminal growth rate of 1%. AOT has gained 40% since our initiation with a BUY in late October last year, despite having appreciated by 125% earlier. OSK Research See important disclosures at the end of this report 2

3 OSK Research PP10551/09/2013 (032829) 15 Feb 2013 Quarterly Results Table Operating Statistics 1Q12 4Q12 1Q13 Q-o-Q Y-o-Y Comments International aircraft Movement ('000) % 15% Domestic Aircraft Movement ('000) % 18% Total Aircraft Movement ('000) % 17% International Passenger (m) % 35% Better than expected Domestic Passenger (m) % 19% Improved, thanks to DMK, which is closer to the city Total Passenger (m) % 29% We have raised our FY13 growth to 16.3% from 12.8% earlier. Total Embarking Passengers (m) % 30% Total Freight ('000) % -2% Per unit analysis 1Q12 4Q12 1Q13 Q-o-Q Y-o-Y PSC per Pax (THB) % 8% Higher mix of international passengers International % of total pax 57% 56% 56% 1% -1% Landing & Parking charges per aircraft (THB) % -23% Down due to DMK incentive scheme Aircraft Service charges per aircraft % -5% Down due to DMK incentive scheme service revenue per aircraft % -2% Down due to DMK incentive scheme concession revenue per pax % 9% Higher due to DMK and resilient spending at BKK Results Table (THB m) 1Q12 4Q12 1Q13 Q-o-Q Y-o-Y Operating revenues Landing and parking charges % -10% Down due to DMK incentive scheme Passenger service charges % 41% Higher mix of international passengers Aircraft service charges % 11% Down due to DMK incentive scheme Office and state property rents % 13% Higher due to DMK Service revenues % 14% Down due to DMK incentive scheme Concession revenues % 39% Higher due to DMK and resilient spending at BKK Total Revenue % 26% In line Personnel expenses % 21% Temporary staff hires and minimum wage hike Operating expenses % 27% Higher utilities expense due to DMK Repairs and maintenance % 3% State property rental % 28% Others % 1363% EBITDA % 29% Inline Depreciation and amortization % 1% EBIT % 42% Inline Interest Income % 6% Higher cash pile Dividend Income % NM Interest Expense % -9% Lower due to depreciating JPY Profit before associate and exceptionals % 49% Associate NM Exceptionals % -2791% unrealized forex gains on depreciating JPY PBT % 108% TAX % 28% MI % -48% PATMI % 173% Core PATAMI % 66% In line EPS % 66% EBITDA Margin Better operating leverage EBIT Margin PBT ex exceptional Margin Core PATAMI Margin OSK Research See important disclosures at the end of this report 3

4 OSK Research PP10551/09/2013 (032829) 15 Feb 2013 Figure 1 Changes in forecasts Previous Revised % change Key Assumptions FY12 FY13f FY14f FY15f FY13f FY14f FY15f FY13f FY14f FY15f Pax Traffic (m) % 3.2% 3.2% Aircraft ' % 2.9% 2.9% PSC - int (THB) % 0.0% 0.0% PSC - dom (THB) % 0.0% 0.0% Staff pay increment (% y-o-y) % 0.0% 0.0% Income Statement FY12f FY13f FY14f FY15f FY13f FY14f FY15f FY13f FY14f FY15f Landing and parking charges % -3.8% -3.9% Passenger service charges % 3.6% 3.6% Aircraft service charges % -13.3% -13.3% Office and state property rents % 0.0% 0.0% Service revenues % 2.9% 2.9% Concession revenues % 4.7% 5.6% Total operating revenues % 2.2% 2.5% Personnel expenses % 7.9% 7.9% Operating expenses % 0.0% 0.0% Repairs and maintenance % 2.9% 3.0% State property rental % 2.2% 2.5% Others % 0.0% 0.0% EBITDA % 1.1% 1.5% Depreciation and amortization % 0.0% 0.0% EBIT % 1.4% 1.9% Interest Income % -0.2% 0.9% Dividend Income % 0.0% 0.0% Interest Expense % -7.2% -7.0% Profit before associate and exceptionals % 2.3% 2.7% Associate Exceptionals PBT % 2.3% 2.7% TAX % 2.3% 2.7% MI % 0.0% 0.0% PATMI % 2.3% 2.7% Core PATAMI % 2.3% 2.7% Source: OSK, AOT OSK Research See important disclosures at the end of this report 4

5 OSK Research FINANCIAL Profit & Loss (THBm) Sep-11 Sep-12 Sep-13F Sep-14F Sep-15F Total turnover 28,641 30,472 36,755 40,485 47,149 Cost of sales (9,651) (10,409) (12,679) (13,737) (14,925) Gross profit 18,990 20,063 24,076 26,748 32,224 Gen & admin expenses (12,016) (9,283) (10,793) (11,933) (13,285) Selling expenses Other operating costs (270) Operating profit 6,706 11,141 13,656 15,200 19,337 Operating EBITDA 14,572 15,810 18,276 19,772 23,968 Depreciation of fixed assets (7,866) (4,537) (4,477) (4,416) (4,461) Amortisation of intangible assets - (131) (143) (156) (170) Operating EBIT 6,706 11,141 13,656 15,200 19,337 Net income from investments Interest income 795 1,263 1,508 1,829 2,111 Interest expense (2,224) (2,060) (1,843) (1,739) (1,787) Exceptional income - net (1,792) (389) Pre-tax profit 3,523 9,991 13,357 15,327 19,698 Taxation (1,262) (3,494) (4,006) (4,596) (5,908) Minority interests (44) Profit after tax & minorities 2,217 6,503 9,358 10,737 13,797 Net income to ord equity 2,217 6,503 9,358 10,737 13,797 Recurring net profit 4,008 6,892 9,358 10,737 13,797 Balance Sheet (THBm) Sep-11 Sep-12 Sep-13F Sep-14F Sep-15F Total cash and equivalents 26,892 32,111 38,930 44,934 48,340 Inventories Accounts receivable 3,926 3,809 4,257 4,707 5,148 Total current assets 31,954 37,183 44,533 51,071 55,002 Other current assets 823 1,012 1,062 1,116 1,171 Total investments 14,738 12,217 12,357 12,500 12,647 Tangible fixed assets 90,014 88,662 88,335 88,255 94,281 Intangible assets Total other assets 13,201 11,333 7,678 7,905 8,140 Total non-current assets 118, , , , ,382 Total assets 150, , , , ,385 Short-term debt 5,518 5,445 5,445 5,445 5,445 Accounts payable 1,042 1,259 2,045 2,261 2,473 Other current liabilities 10,007 10,714 10,989 10,574 10,858 Total current liabilities 16,567 17,418 18,479 18,280 18,776 Total long-term debt 58,039 51,407 48,200 49,700 51,200 Other liabilities 3,716 3,392 3,373 2,372 2,345 Total non-current liabilities 61,755 54,798 51,573 52,072 53,545 Total liabilities 78,322 72,217 70,052 70,352 72,321 Share capital 14,286 14,286 14,286 14,286 14,286 Retained earnings reserve 43,685 49,041 54,654 61,093 69,367 Other reserves 14,161 14,316 14,316 14,316 14,316 Shareholders' equity 72,132 77,643 83,256 89,695 97,969 Minority interests Other equity 0 (0) 0-0 Total equity 72,277 77,795 83,381 89,808 98,063 Total liabilities & shareholders' equity 150, , , , ,385 OSK Research See important disclosures at the end of this report 5

6 OSK Research Cashflow (THBm) Sep-11 Sep-12 Sep-13F Sep-14F Sep-15F Operating profit 6,706 11,141 13,656 15,200 19,337 Depreciation & amortisation 7,866 4,669 4,620 4,572 4,631 Change in working capital 2, , Other operating cashflow 2,695 2,374 1,557 (3,893) (3,528) Operating cashflow 19,715 18,979 21,282 16,772 21,328 Interest received 614 1,164 1,390 1,685 1,945 Interest paid (2,224) (2,060) (1,843) (1,739) (1,787) Dividends received Tax paid (1,400) (2,038) (2,336) (2,681) (3,445) Cashflow from operations 16,742 16,080 18,529 14,074 18,078 Capex (3,458) (4,882) (4,000) (4,000) (10,000) Other new investments (3,965) (4,095) (666) (681) (695) Other investing cashflow 3 (670) Cashflow from investing activities (7,419) (9,648) (4,626) (4,640) (10,654) Dividends paid to ordinary shareholders (786) (1,143) (2,571) (3,742) (4,293) Increase in debt (4,675) (4,718) (3,203) 1,505 1,506 Other financing cashflow (2,202) (2,098) (1,878) (1,774) (1,824) Cashflow from financing activities (7,662) (7,959) (7,652) (4,010) (4,611) Cash at beginning of period 3,519 5,179 3,653 9,903 15,327 Total cash generated 1,661 (1,527) 6,250 5,424 2,813 Implied cash at end of period 5,179 3,653 9,903 15,327 18,140 Source : OSK, Bloomberg OSK Research See important disclosures at the end of this report 6

7 NR OSK Research RECOMMENDATION CHART Price Close 126 Recommendations & Target Price Buy Neutral Sell Trading Buy Take Profit Unrated 6 Feb-08 May-09 Sep-10 Dec-11 Source : OSK, Bloomberg Date Recommendation Target Price Price Buy Buy Buy Buy Buy OSK Research See important disclosures at the end of this report 7

8 OSK Guide to Investment Ratings Buy: Share price may exceed 10% over the next 12 months Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain Neutral: Share price may fall within the range of +/- 10% over the next 12 months Take Profit: Target price has been attained. Look to accumulate at lower levels Sell: Share price may fall by more than 10% over the next 12 months Not Rated: Stock is not within regular research coverage Disclosure & Disclaimer All research is based on material compiled from data considered to be reliable at the time of writing, but OSK does not make any representation or warranty, express or implied, as to its accuracy, completeness or correctness. 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