fy13 pre-exceptional profit slightly below...

Ref. No.: CO2556_1007 1 of 6

Airports of Thailand – AOT FY13 pre-exceptional profit slightly below forecast Bloomberg │ Reuters AOT TB │AOT.BK

Thailand Equities Research 2 December 2013

Report type: Company Results

Company Overview AOT is engaged in management, operations and development of six airports namely Suvarnabhumi, Don Muang, Chiang Mai, Chiang Rai, Hat Yai and Phuket.

• AOT reported in-line results in FY13 including a reversal of impairment loss for Don Muang Airport.

• Chinese government’s measures to crack down on ‘zero dollar’ tour rackets and domestic political uncertainty may drive down tourist numbers.

• We leave our FY14 DCF-based target price for AOT unchanged at Bt196/share. AOT share prices came under pressure from domestic political anxiety after thirty-two countries have issued travel warnings for Thailand. As valuation looks less demanding with more upside from current trading levels, we upgrade AOT shares to ‘ACCUMULATE.’

What is the news? AOT reported FY13 net profit of Bt16,347mn, up 151.5% y-y due chiefly to a Bt3,603mn reversal of impairment loss for Don Muang Airport and a FX gain of Bt3,135mn. Stripping out ex-items, FY13 profit rose by 26.50% y-y boosted by a 20.8% y-y jump in total operating revenue on the back of a growth in passenger and aircraft movements which offset huge employee bonus expenses. How do we view this? Key risk factors to watch include Chinese government’s measures to clamp down on ‘zero dollar’ tours and domestic political turmoil which may wreck havoc on tourism in 1QFY14. If domestic political uncertainty drags on, the impact would continue well into 2QFY14 though the second quarter is traditionally the high season for air travel. The Tourism Authority of Thailand (TAT) forecasts international tourist arrivals to Thailand will rise to 28mn in 2014 from an estimate of 26mn in 2013. Investment Actions? We leave our FY14 DCF-based target price for AOT unchanged at Bt196/share. AOT share prices came under pressure from domestic political anxiety. As valuation looks less demanding with more upside from current trading levels, we upgrade AOT shares to ‘ACCUMULATE.’

Analyst Siam Tiyanont Securities Investment Analyst #17970 Tel. 662-2-635-1700 Ext. 483

Airports of Thailand

Rating 2.00 Accumulate

- Previous Rating 3.00 Neutral

Target Price (Bt) 196.00

- Previous Target Price (Bt) 196.00

Closing Price (Bt) 187.50

Expected Capital Gains (%) 4.5%

Expected Dividend Yield (%) 2.4%

Expected Total Return (%) 7.0%

Raw Beta (Past 2yrs w eekly data) 1.17

Market Cap. (USD mn) 8,342

Enterprise Value (USD mn) 8,435

Market Cap. (Bt mn) 267,857

Enterprise Value (Bt mn) 270,760

3M Average Daily T/O (mn) 4.1

52 week range 88.75 - 225

Closing Price in 52 week range

Major Shareholders (%)

70.0

4.5

2.5

CG Report - 2013

(Excellent)

Key Financial SummaryFYE 9/11 9/12 9/13 9/14F**

Revenue (Btmn) 28,641 30,472 36,810 41,595

Net Profit (Btmn) 2,215 6,500 16,347 13,010

EPS (Bt) 1.55 4.55 11.44 9.11

Net Profit, adj. (Btmn) 3,414 6,534 8,265 13,010

EPS, adj. (Bt) 2.39 4.57 5.79 9.11

P/E (X),adj. 78.5 41.0 32.4 20.6

BVPS (Bt) 50.59 54.33 64.21 70.42

P/B (X) 3.7 3.5 2.9 2.7

DPS (Bt) 0.80 1.80 2.89 4.55

Div. Yield (%) 0.4 1.0 1.5 2.4

Source: Bloomberg, PSR est.

*All multiples & yields based on current market price

** Excluded FX

Valuation Method

DCF (WACC 8.25%, Grow th Rate 3%)

1. MOF

2. Thai NVDR Co., Ltd.

3. HSBC (Singapore) Nominees Pte Ltd.

50.00

100.00

150.00

200.00

250.00

Nov-12

Dec-12

Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13

Jul-13

Aug-13

Sep-13

Oct-13

Nov-13

0

4

8

12

16

20

24

Volume, mn AOT TB EQUITY SETI rebased

0% 50% 100%

Airports of Thailand – AOT Thailand Equities Research 2 December 2013

2 of 6

FY13 pre-exceptional profit slightly below forecast AOT reported 4QFY13 net profit of Bt5,254mn, up as much as 240.3% y-y due largely to a Bt3,603mn reversal of impairment loss for Don Muang Airport. Stripping out this ex-item, 4QFY13 profit fell slightly short of our forecast. For all of FY13, net profit surged 151.5% y-y to Bt16,347mn. In FY13, total operating revenue jumped 20.8% y-y to Bt36,810mn as (1) aeronautical revenue leapt 19.3% y-y on the back of (i) a 26.6% surge in revenue from passenger service charges (PSC) driven by a 20.4% rise in passenger traffic to 86.13mn thanks to a 22.4% increase in international passenger numbers and a 17.2% rise in domestic passenger traffic, (ii) a flat revenue from landing and parking charges despite a 16.5% increase in aircraft movements to 559,423 takeoffs and landings due to the incentive scheme for relocation of low-cost carriers (LCCs) and point-to-point carriers to Don Muang Airport from Suvarnabhumi Airport, and (iii) a 9.2% growth in revenue from passenger facility charges and (2) non-aeronautical revenue swelled 23.1% y-y boosted by (i) a 31.3% leap in concession revenue on higher concession and service revenues in line with rising passenger numbers and the reopening of Don Muang Airport, (ii) a 10.3% increase in property rental income and (iii) a 12.0% rise in service revenue. Total operating expenses edged up 10.4% y-y due largely to higher personnel expenses on year-end bonuses. Operating expenses shot up 28.3% y-y. Only repair and maintenance expenses retreated. In this period, the results also included a Bt3,603mn reversal of impairment loss for Don Muang Airport and a FX gain of Bt3,135mn. Stripping out ex-items, FY13 profit rose by 26.5% y-y to Bt8,265mn. Tourism to bear brunt of domestic political turmoil The Tourism Authority of Thailand (TAT) forecasts the number of international tourist arrivals to Thailand will reach 26mn this year. The target is also likely to be met but there remain key risk factors to watch. The number of Chinese tourists dropped after Chinese government took measures to crack down on ‘zero dollar’ or ‘negative-fare’ tours in Oct 2013. Heightened political tensions also prompted thirty-two countries to issue travel warnings for Thailand. The tourism industry may bear the brunt of domestic political woes in Nov-Dec 2013. If political uncertainty further drags on, the impact may continue well into early 2014. TAT estimates the number of international tourist arrivals will hit 28mn in 2014. In Oct 2013, AOT reported that aircraft and passenger movements continued to rise 17.9% and 14.0% y-y to 50,371 takeoffs and landings and 7.34mn respectively. Upgrade to ‘ACCUMULATE’ We leave our FY14 total operating revenue outlook for AOT unchanged at Bt41,959mn but we trim our FY14 pre-exceptional profit forecast to Bt13,010mn from a previous view of Bt13,542mn to reflect higher depreciation and amortization charges for Don Muang Airport after a reversal of impairment loss. Our FY14 target price for AOT is unchanged at Bt196/share. The target is DCF-based. AOT share prices came under pressure from domestic political anxiety and concerns over Chinese government’s measures to clamp down on ‘zero dollar’ tours. As valuation looks less demanding with more upside from current trading levels, we upgrade AOT shares to ‘ACCUMULATE.’


3 of 6

AOT (Bt m) 4Q12 3Q12 4Q11 y-y+/- q-q+/- 2012 2011 y-y+/-

Total revenues 9,526.79 8,877.09 7,899.5 20.60% 7.32% 36,810.40 30,472.10 20.80%

Aeronautical revenues 5,556.11 5,396.04 4,697.90 18.27% 2.97% 21,979.58 18,428.21 19.27%

Landing and parking charges 1,247.30 1,201.73 1,149.56 8.50% 3.79% 4,760.80 4,755.88 0.10%

Passenger service charges 4,178.73 4,064.22 3,424.47 22.03% 2.82% 16,684.47 13,183.06 26.56%

Aircraft service charges 130.08 130.09 123.87 5.01% -0.01% 534.31 489.27 9.21%

Non-aeronautical revenues 3,970.7 3,481.04 3,201.59 24.02% 14.07% 14,830.8 12,043.9 23.14%

Office / state property rents 435.38 436.29 391.39 11.24% -0.21% 1,756.52 1,593.08 10.26%

Service revenues 995.26 918.38 841.30 18.30% 8.37% 3,775.01 3,370.04 12.02%

Concession revenues 2,540.03 2,126.37 1,968.89 29.01% 19.45% 9,299.29 7,080.78 31.33%

Total operating expenses 6,718.71 4,991.42 5,805.85 15.72% 34.61% 21,746.52 19,692.06 10.43%

Personnel expenses 2,053.71 1,090.09 1,466.57 40.04% 88.40% 5,303.16 4,614.47 14.92%

Operating expenses 2,240.48 1,864.83 1,861.10 20.38% 20.14% 8,037.75 6,794.73 18.29%

Repair and maintenance 770.73 471.82 892.89 -13.68% 63.35% 2,040.22 2,303.96 -11.45%

State peoperty rental 417.74 384.56 342.46 21.98% 8.63% 1,590.15 1,310.02 21.38%

Depreciation and amortization 1,236.04 1,180.13 1,242.83 -0.55% 4.74% 4,775.23 4,668.88 2.28%

Operating profit 2,808.08 3,885.67 2,093.64 34.12% -27.73% 15,063.88 10,780.04 39.74%

Other incomes 597.22 406.01 364.84 63.69% 47.10% 1,744.37 1,780.31 -2.02%

Other expenses -3,409.30 31.09 134.34 -2638% -11067% -3,260.17 722.91 -550.98%

EBIT 6,814.61 4,260.58 2,324.14 193.21% 59.95% 20,068.43 11,837.44 69.53%

Interest expenese 493.01 530.82 502.03 -1.80% -7.12% 1,977.05 2,059.98 -4.03%

EBT 6,321.60 3,729.77 1,822.11 246.94% 69.49% 18,091.37 9,777.46 85.03%

Tax 1,111.10 1,020.99 339.26 100.00% 8.83% 4,869.48 3,494.19 39%

EAT 5,210.50 2,708.78 1,482.85 251.38% 92.36% 13,221.89 6,283.27 110.43%

Minorities interest 1.62 -6.30 -0.73 322.22% 125.73% 9.45 6.27 50.61%

Gain/Loss from FX 44.87 437.37 60.41 -25.73% -89.74% 3,134.90 222.74 1307.44%

Net profit 5,253.75 3,152.45 1,544.00 240.27% 66.66% 16,347.35 6,499.74 151.51%

EPS (Bt) 3.68 2.21 1.08 240.27% 66.66% 11.44 4.55 151.51%

Net profit before FX 5,208.88 2,715.07 1,483.58 251% 91.85% 13,212.45 6,277.00 110.49%

Cost of revenues/revenues 70.52% 56.23% 73.50% -4.04% 25.43% 59.08% 64.62% -8.58%

SG&A/revenues 70.52% 56.23% 73.50% -4.04% 25.43% 59.08% 64.62% -8.58%

Operating margin 29.48% 43.77% 26.50% 11.21% -32.66% 40.92% 35.38% 15.68%

Net profit margin 55.15% 35.51% 19.55% 182.15% 55.29% 44.41% 21.33% 108.20%

Balance sheet (Btm)

Assets 153,061 145,729 150,012 2.03% 5.03% 153,061 150,012 2.03%

Liabilities 61,321 59,264 72,217 -15.09% 3.47% 61,321 72,217 -15.09%

Paid-up (m shrs) - Par Bt10 1,429 1,429 1,429 0.00% 0.00% 1,429 1,429 0.00%

Equities 91,740 86,464 77,795 17.93% 6.10% 91,740 77,795 17.93%

Debt/equity (x) 0.67 0.69 0.93 -27.99% -2.48% 0.67 0.93 -27.99%

Book value/share(Bt) 64.22 60.53 54.46 17.93% 6.10% 64.22 54.46 17.93%


4 of 6

Total Returns Recommendation Rating> +20% Buy 1+5% to +20% Accumulate/Trading Buy 2-5% to +5% Neutral 3-5% to -20% Reduce/Trading Sell 4>-20% Sell 5

We do not base our recommendations entirely on the above quantitative return bands. We

consider qualitative factors like (but not limited to) a stock's risk rew ard profile, market sentiment, recent rate of share price appreciation, presence or absence of stock price catalysts, and speculative undertones surrounding the stock, before making our final recommendation

Ratings History

Phillip Group Rating System

Remarks

12345

Source: Bloomberg, PSR

50

100

150

200

250

Jun-12

Sep-12

Dec-12

Mar-13

Jun-13

Sep-13

Dec-13

Mar-14

Jun-14

Target PriceMarket Price


5 of 6

Fundamental: Name Analyst Reg No. Tel Sector Sasikorn Charoensuwan, CFA, CAIA Capital Market Investment Analyst#9744 662 635 1700#480 Consumer, Commerce Rutsada Tweesaengsakulthai Securities Investment Analyst#17972 662 635 1700#482 ICT, Energy, Health

Care Danai Tunyaphisitchai, CFA Capital Market Investment Analyst #2375 662 635 1700#481 Construction Materials,

Property Development Naree Apisawaittakan Securities Investment Analyst #17971 662 635 1700#484 Agro & Food,

Electronics Siam Tiyanont Securities Investment Analyst #17970 662 635 1700#483 Transportation, Media

& Publishing, Tourism Ornmongkol Tantitanatorn Capital Market Investment Analyst #34100

662 635 1700#491 Automotive, Energy,

Packaging Adisorn Muangparnchon Securities Investment Analyst #18577 662 635 1700#497 Banking, Securities &

Finance, Insurance Chantaramanee Tavivorakiat Assistant Analyst

Vichuda Siriployprakray Assistant Analyst Strategy: Teerada Charnyingyong Securities Investment Analyst #9501 662 635 1700#487 Chutikarn Santimetvirul Derivatives Investment Analyst #37928 662 635 1700#491 Werajak Jungkiatkajorn Capital Market Investment Analyst #28087 662 635 1700#495 Chonlada Lertsanguansinchai Assistant Analyst Rittiporn Songsermsawad Assistant Analyst Technical: Sasima Hattakitnikorn Securities Investment Analyst #8328 662 635 1700#490 Kanoksak Vutipan Capital Market Investment Analyst #32423 662 635 1700#485 Database & Production: Manunpat Yuenyongwatanakorn Sutiporn Oupkaew Mathurin Karnsomprot Translation: Chaiyot Ingkhasorarat Naowarat Angurasuchon

Results Presentation

Score Range Number of Logo

Less than 50 No logo given

50 - 59

60 - 69

70 - 79

80 - 89

90 - 100

The disclosure of the survey result of the Thai Institute of Directors Association (IOD) regarding corporate governance is made pursuant to the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the Market for Alternative disclosure to the public and able to be accessed by a general public investor. The results, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that data. Phillip Securities (Thailand) of securities company does not confirm nor certify the accuracy of such survey result.


6 of 6

Bangkok Offices Head Office 15th Fl., Vorawat Bldg. Tel : 0 2635 1700 , 0 2268 0999 Srinakarindr 17th Fl., Modernform Tower Tel : 0 2722 8344-53 Viphavadi 15th Fl., Lao Peng Nguan Tower 1 Tel : 0 2618 8400 Yaowarat 19th Fl., Kanchanadhat Bldg. Tel : 0 2622 7833 Bangkapi 1 8th Fl., The Mall Office Tower-Bangkapi Tel : 0 2363 3263 Bangkapi 2 9th Fl., The Mall Office Tower-Bangkapi Tel : 0 2363 3269 Hua Lumphong 4th Fl., Tang Hua Pak Bldg., 320 Rama 4 Rd. Tel : 0 2639 1200 Rangsit G Fl., Room#PLZ.G.SHP065A Future Park Rangsit Tel : 0 2958 5040 Sindhorn 19th Fl., Sindhorn Tower 3 Building, Tel : 0 2650 9717 Siam Discovery 11st Floor, Unit A2, Siam Tower,Tel : 02 658 0776 Provincial Offices Chaing Mai 313/15 Moo6 Chaing Mai – Lamphun Nong Hoi, Tel 053-141969 Khon Kaen 4th Fl., Kow Yoo Hah Bldg.Tel : 0 4332 5044-8 Khon Kaen - Rim Bueng 3rd Fl., Arokaya Bldg., Tel : 0 4322 6026 Phisanulok 2nd Fl., Thai Sivarat Bldg., Tel : 0 5524 3646 Had Yai 4th Fl., Southland Rubber Bldg., Tel : 0 7423 4095-99110 Had Yai - Petkasem 3rd Fl., Unit 3D, Redar Group Bldg., Tel : 0 7422 3044 Suratthan 62/9 Donnok Rd., Tel : 077 206 131 Chumporn Investor Center 25/45 Krom Luang Chumporn Rd.,Tel : 0 7757 0652-3 Overseas Offices SINGAPORE Phillip Securities Pte Ltd Raffles City Tower Tel : (65) 6533 6001 www.poems.com.sg HONG KONG Phillip Securities (HK) Ltd 11/F United Centre 95 Queensway, Tel (852) 22776600 www.phillip.com.hk MALAYSIA Phillip Capital Management Sdn Bhd, Block B Level 3 Megan Avenue II Tel (603) 21628841 www.poems.com.my JAPAN PhillipCapital Japan K.K. Nagata-cho Bldg., 8F, Tokyo Tel (81-3) 35953631 www.phillip.co.jp INDONESIA PT Phillip Securities Indonesia ANZ Tower Level 23B, Tel (62-21) 57900800 www.phillip.co.id CHINA Phillip Financial Advisory (Shanghai) Co. Ltd Ocean Tower Unit 2318 Tel (86-21) 51699200 www.phillip.com.cn FRANCE King & Shaxson Capital Limited 3rd Flr, 35 Rue de la Bienfaisance Tel (33-1) 45633100 www.kingandshaxson.com UNITED KINGDOM King & Shaxson Capital Limited 6th Flr, Candlewick House, Tel (44-20) 7426 5950 www.kingandshaxson.com UNITED STATES Phillip Futures Inc The Chicago Board of Trade Building Tel +1.312.356.9000 AUSTRALIA PhillipCapital Australia Level 37, Collins Street, Melbourne, Tel (613) 96298380 Fwww.phillipcapital.com.au SRI LANKA Asha Phillip Securities Ltd Level 4, Millennium House, Tel: (+94) 11 2429 100 [email protected] TURKEY Hak Menkul Kiymetler A.Ş Dr.Cemil Bengü Cad. Tel: (+90) (212) 296 84 84 (pbx) [email protected]

INDIA PhillipCapital (India) Private Limited No. 1, C‐ Block, 2nd Floor,Modern Center , Jacob Circle, K. K. Marg, Mahalaxmi Mumbai 400011 Tel: (9122) 2300 2999 Website: www.phillipcapital.in

DUBAI PhillipCapital (India) Pvt Ltd.601, White Crown Building Plot no 58, Sheikh Zayed Road P.O, Box 212291, Dubai UAE. Mahalaxmi Mumbai 400011 Tel: (9122) 2300 2999 Website: www.phillipcapital.in CAMBADIA Building No71, St 163, Sangkat Toul Svay Prey I, Khan Chamkarmorn, Phnom Penh, Kingdom of

Cambodia Tel: (855) 23 217 942 Website: www.kredit.com.kh

The information contained herein is based on sources which Phillip Securities (Thailand) believes reliable. We do not guarantee its accuracy or completeness. Opinions and estimates expressed herein are subject to change without notice. This report is for information only and should not be construed as an offer or solicitation for the purchase or sale of any securities referred to herein. We accept no liability for any loss, direct or indirect, from the use of this document. The directors and/or employees of Phillip Securities and or its associates may have an interest in the securities mentioned in the securities mentioned herein

fy13 pre-exceptional profit slightly below...

Documents