Asia Aviation
Asia Aviation Buy (16E TP Bt8.00)
Company Update
Close Bt6.15
Transport & Logistics May 16, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Growth momentum to continue with potential new business Price Performance (%)
Reiterate BUY with revised PER‐based TP of Bt8.00 After the earnings upgrade on the better‐than‐expected results in 1Q16, we maintain our BUY recommendation for AAV with a revised PER‐based target price of Bt8.00, vs. Bt7.80 previously, based on PER of 20x, ‐0.5SD. We peg AAV at higher PER than peers owing to its strong branding in the region and potential upside from new business in the future. Better results to continue in 2‐3Q16E AAV revealed that the better‐than‐expected cabin factor in 1Q16 (+4ppt) partly owed to NOK’s pilot shortage problem, especially for domestic routes. Ancillary revenue related to on‐board meals increased significantly in the quarter. As such, although it will enter the low season in 2‐3Q16E, passenger volume, the cabin factor, and ticket fares are likely to continue increasing significantly on a yearly basis. AAV believes that after NOK’s problem is likely solved late this year, around 50% of the passenger volume from NOK may not move back owing to AAV’s better services, especially with regard to AAV’s on‐time schedule service.
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.415
0.476
KT ZMICO vs. consensus Share data
‐6.0%
‐16.0%
Reuters / Bloomberg
AAV.BK/AAV TB
Paid‐up Shares (m)
4,850.00
Par (Bt)
0.10
Market cap (Bt bn / US$ m) Foreign limit / actual (%)
30.00/841.00 0.10/0.10
52 week High / Low (Bt)
6.25/3.90
Avg. daily T/O (shares 000)
25,893.00
NVDR (%)
10.84
Estimated free float (%)
54.46
Beta
0.67
URL
www.aavplc.co.th
CGR
Anti‐corruption
Level 3B (Established)
Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695‐5836
Additional flights at new hub – Hat Yai – in 2Q16 As of 1Q16, AAV flew to 45 destinations with 1,036 weekly flights, 63% of which were domestic. In 1Q16, AAV introduced two new routes consisting of Phuket‐Wuhan and BKK‐Luang Prabang (Laos). For 2Q16, AAV will aggressively expand routes to seven new destinations, with the new hub of Hat Yai, such as Hat Yai – Chiang Rai, Hat Yai –Johor Bahru (Malaysia), and Hat Yai – Khon Kaen. AAV still targets passenger volume growth of +15% to 17mn in 2016E. Ongoing talks with King Power Group over online duty free business AAV revealed that the company and King Power Group are in discussions over cooperation on an online duty free home delivery business. Currently, it is in the process of feasibility and legal studies. At present, duty free business revenue contributes around 1‐2% of AAV’s total revenue, vs. around 7% (duty free & home delivery) at other airlines. This issue is likely to be finalized in a couple months. 2016 normalized profit revised up by 8% We revise up the normalized profit estimate in 2016E by 8% to Bt1.9bn, owing mainly to an upward revision of the cabin factor by +2 ppt to 84% (vs. 82% previously). Meanwhile we maintain our conservative view of flattening ticket fares in 2016E (vs. +3% for AAV’s target). Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. profit (Btmn) Norm. EPS (Bt) Norm. EPS growth (%) DPS (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2013 23,994 1,043 0.22 914 0.19 13.69 0.00 3.99 2013 32.65 11.63 1.54 0.00 4.86 8.83
2014 25,981 183 0.04 120 0.02 (86.85) 0.00 4.03 2014 248.22 30.53 1.53 0.00 0.62 29.58
2015 30,345 1,078 0.22 1,181 0.24 882.68 0.10 4.15 2015 25.26 9.61 1.48 1.63 5.95 32.00
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2016E 34,805 1,912 0.39 1,912 0.39 61.95 0.18 4.37 2016E 15.60 6.53 1.41 2.88 9.25 27.54
2017E 38,516 1,934 0.40 1,934 0.40 1.13 0.18 4.59 2017E 15.42 6.12 1.34 2.92 8.90 22.04
Figure 1: AAV’s PER band and sensitivity of market prices based on PER at different standard deviation levels 2016E +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD ‐2.5SD
(X) 45 40 35 +1.0 S.D. 30 Avg.
25 20
-0.50S.D.
15
Feb-16
May-16
Nov-15
Aug-15
Feb-15
May-15
Nov-14
Aug-14
Feb-14
May-14
Nov-13
Aug-13
Feb-13
May-13
Nov-12
Aug-12
-1 .0S.D.
May-12
10
PER (x) 29.9 26.6 23.3 20.0 16.8 13.5 10.2 6.9
Implied market price (Bt) 11.76 10.47 9.18 7.89 6.60 5.31 4.02 2.73
Upside/Downside vs. current market price (%) 91.2 70.3 49.3 28.3 7.3 (13.7) (34.7) (55.6)
Source: Bloomberg, KT ZMICO Research
Figure 2: Peer comparison COUNTRY
PER (x) 15
16E
PBV (x)
Yield (%)
ROE (%)
EV/EBITDA (x)
17E
15
16E
17E
15
16E
17E
15
16E
17E
15
16E
17E 7.6
LCC 6.6
7.0
6.2
0.8
1.0
0.8
0.0
2.6
2.9
12.0
15.9
14.8
6.0
7.9
12.4
10.8
10.2
1.3
1.2
1.2
6.6
7.1
7.3
10.2
12.5
12.9
8.3
7.5
7.2
7.5
6.7
6.8
2.0
1.6
1.3
2.2
2.5
2.6
28.7
24.2
20.7
5.6
5.5
5.4
Britain
12.8
10.1
8.8
3.1
2.3
1.9
3.1
4.3
4.7
24.8
23.9
23.8
8.0
6.2
5.4
Ireland
17.8
14.3
11.7
3.8
3.9
3.1
0.0
2.3
1.0
23.7
30.8
29.3
10.5
9.0
7.6
SOUTHWEST AIRLINES
USA
12.2
10.2
9.5
3.8
3.2
2.4
0.7
0.8
0.8
30.9
33.4
27.5
5.5
5.0
4.8
AIR ASIA BHD
Malaysia
AIRARABI
UAE
CEBU AIR INC
Philippines
EASYJET PLC RYANAIR HOLDINGS PLC TIGER AIRWAYS HLDG
Singapore
n.a.
n.a.
20.9
4.0
4.9
4.1
0.0
0.0
0.0
n.m.
5.7
20.6
n.m.
17.7
11.4
VIRGIN AUSTRALIA HLDG
Australia
n.a.
15.9
8.8
1.4
1.4
1.2
0.0
0.0
0.2
(10.4)
8.3
16.5
16.3
6.3
4.9
WESTJET AIRLINES LTD
Canada
6.6
8.4
8.3
1.3
1.1
1.0
2.7
3.0
3.1
19.8
13.5
12.3
2.9
3.2
3.1
10.8
10.4
10.1
2.4
2.3
1.9
1.7
2.5
2.5
17.5
18.7
19.8
7.9
7.6
6.4
Conventional CHINA SOUTHERN AIRLINES‐H China
6.8
5.3
5.4
1.0
0.9
0.8
2.2
2.2
3.6
15.3
16.1
14.4
4.3
4.0
3.8
AIR CHINA LTD‐H
China
5.8
5.3
5.5
0.9
0.8
0.7
2.5
2.6
3.0
11.8
14.4
12.8
5.1
4.8
4.6
CATHAY PACIFIC AIRWAYS
Hong Kong
6.0
5.5
5.0
1.1
0.9
0.8
1.1
1.2
1.5
18.3
16.7
16.0
5.4
4.9
4.6
CHINA EASTERN AIRLINES‐H
China
8.8
8.6
8.2
1.1
1.0
0.9
3.9
4.1
4.4
12.0
12.5
12.0
6.2
5.5
5.4
KOREAN AIR LINES CO LTD
South Korea
38.1
19.2
14.6
1.1
1.0
1.0
1.8
3.4
4.0
2.9
5.6
7.5
5.2
4.2
3.7
SINGAPORE AIRLINES LTD
Singapore
n.a.
25.9
7.3
0.8
1.1
0.9
0.0
0.0
0.0
‐24.9
7.9
14.0
6.8
6.7
6.7
EVA AIRWAYS CORP
Taiwan
8.7
8.4
10.0
1.3
1.2
1.0
0.7
0.9
0.0
18.3
14.0
10.0
5.4
5.2
5.4
CHINA AIRLINES LTD
Taiwan
9.2
9.0
8.1
1.1
1.0
0.9
0.4
0.2
0.0
12.5
11.5
10.2
5.6
5.4
5.7
11.9
10.9
8.0
1.1
1.0
0.9
1.6
1.8
2.1
8.3
12.3
12.1
5.5
5.1
5.0
Average (simple)
Average (simple)
Source: Bloomberg
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A expense EBITDA Depreciation & amortization EBIT Interest expense Equity earnings Other income / exp. EBT Corporate tax Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity CASH FLOW (Btm) Net income Depreciation & amortization Change in working capital FX, non‐cash adjustment & others Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) Core EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%) FINANCIAL QUALITY Total debt to capital employed (x) Net debt to equity (x)
2013 23,994 (19,928) 4,066 (1,756) 2,712 (402) 2,310 (171) 0 291 2,430 (651) (736) 1,043 0.22 0.22 914 0.19 0.00
2014 25,981 (23,708) 2,273 (1,925) 1,166 (818) 348 (313) 0 231 267 1 (85) 183 0.04 0.04 120 0.02 0.00
2015 30,345 (25,315) 5,030 (2,377) 3,775 (1,122) 2,653 (457) 0 16 2,212 (151) (982) 1,078 0.22 0.22 1,181 0.24 0.10
2016E 34,805 (28,095) 6,710 (2,543) 5,422 (1,255) 4,167 (515) 0 76 3,728 (186) (1,629) 1,912 0.39 0.39 1,912 0.39 0.18
2013 6,453 90 10,956 27,436 44,935 615 7,546 18,260 7,329 19,346 44,935
2014 6,298 97 16,033 27,073 49,502 959 11,118 22,486 7,482 19,534 49,502
2015 7,591 94 18,216 26,926 52,827 1,261 12,775 24,743 7,941 20,142 52,827
2016E 7,587 145 20,814 27,252 55,798 1,271 12,152 25,033 9,570 21,195 55,798
2013 1,043 402 2,445 131 4,020 (2,082) (3,483) (5,565) (348) 0 0 0 (348) (1,894) (1,545) (0.32)
2014 183 818 654 194 1,848 (980) 3,004 2,025 (1,043) 0 0 0 (1,043) 2,830 3,873 0.80
2015 1,078 1,122 (345) 1,152 3,007 615 268 883 (2,556) 0 0 0 (2,556) 1,334 3,890 0.80
2016E 1,912 1,255 (1,163) 0 2,004 (910) 0 (910) (613) 0 (485) 0 (1,098) (4) 1,094 0.23
2013 46.2 64.6 13.7 16.9 11.3 9.6 4.3 3.8 26.8
2014 8.3 (57.0) (86.8) 8.7 4.5 1.3 0.7 0.5 (0.5)
2015 16.8 223.7 882.7 16.6 12.4 8.7 3.6 3.9 6.8
2016E 14.7 43.6 61.9 19.3 15.6 12.0 5.5 5.5 5.0
2013 0.30 0.09
2014 0.38 0.30
2015 0.41 0.32
2016E 0.39 0.28
2017E 38,516 (31,496) 7,021 (2,827) 5,672 (1,478) 4,193 (504) 0 81 3,770 (189) (1,648) 1,934 0.40 0.40 1,934 0.40 0.18
2017E 8,542 161 23,297 27,417 59,418 1,577 11,872 25,941 11,217 22,259 59,418
2017E 1,934 1,478 99 0 3,511 (1,721) 0 (1,721) 25 0 (860) 0 (835) 956 1,791 0.37
2017E 10.7 4.6 1.1 18.2 14.7 10.9 5.0 5.0 5.0 2017E 0.38 0.22
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investment in the securities of KTB and ZMICO, investor should consider risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, PLE, TPOLY, BIGC, BJC. KT ZMICO is a co‐underwriter of TPBI.
Anti‐corruption Progress Indicator
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
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KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
Company Update
Close Bt6.15
Transport & Logistics May 16, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Growth momentum to continue with potential new business Price Performance (%)
Reiterate BUY with revised PER‐based TP of Bt8.00 After the earnings upgrade on the better‐than‐expected results in 1Q16, we maintain our BUY recommendation for AAV with a revised PER‐based target price of Bt8.00, vs. Bt7.80 previously, based on PER of 20x, ‐0.5SD. We peg AAV at higher PER than peers owing to its strong branding in the region and potential upside from new business in the future. Better results to continue in 2‐3Q16E AAV revealed that the better‐than‐expected cabin factor in 1Q16 (+4ppt) partly owed to NOK’s pilot shortage problem, especially for domestic routes. Ancillary revenue related to on‐board meals increased significantly in the quarter. As such, although it will enter the low season in 2‐3Q16E, passenger volume, the cabin factor, and ticket fares are likely to continue increasing significantly on a yearly basis. AAV believes that after NOK’s problem is likely solved late this year, around 50% of the passenger volume from NOK may not move back owing to AAV’s better services, especially with regard to AAV’s on‐time schedule service.
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.415
0.476
KT ZMICO vs. consensus Share data
‐6.0%
‐16.0%
Reuters / Bloomberg
AAV.BK/AAV TB
Paid‐up Shares (m)
4,850.00
Par (Bt)
0.10
Market cap (Bt bn / US$ m) Foreign limit / actual (%)
30.00/841.00 0.10/0.10
52 week High / Low (Bt)
6.25/3.90
Avg. daily T/O (shares 000)
25,893.00
NVDR (%)
10.84
Estimated free float (%)
54.46
Beta
0.67
URL
www.aavplc.co.th
CGR
Anti‐corruption
Level 3B (Established)
Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695‐5836
Additional flights at new hub – Hat Yai – in 2Q16 As of 1Q16, AAV flew to 45 destinations with 1,036 weekly flights, 63% of which were domestic. In 1Q16, AAV introduced two new routes consisting of Phuket‐Wuhan and BKK‐Luang Prabang (Laos). For 2Q16, AAV will aggressively expand routes to seven new destinations, with the new hub of Hat Yai, such as Hat Yai – Chiang Rai, Hat Yai –Johor Bahru (Malaysia), and Hat Yai – Khon Kaen. AAV still targets passenger volume growth of +15% to 17mn in 2016E. Ongoing talks with King Power Group over online duty free business AAV revealed that the company and King Power Group are in discussions over cooperation on an online duty free home delivery business. Currently, it is in the process of feasibility and legal studies. At present, duty free business revenue contributes around 1‐2% of AAV’s total revenue, vs. around 7% (duty free & home delivery) at other airlines. This issue is likely to be finalized in a couple months. 2016 normalized profit revised up by 8% We revise up the normalized profit estimate in 2016E by 8% to Bt1.9bn, owing mainly to an upward revision of the cabin factor by +2 ppt to 84% (vs. 82% previously). Meanwhile we maintain our conservative view of flattening ticket fares in 2016E (vs. +3% for AAV’s target). Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. profit (Btmn) Norm. EPS (Bt) Norm. EPS growth (%) DPS (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2013 23,994 1,043 0.22 914 0.19 13.69 0.00 3.99 2013 32.65 11.63 1.54 0.00 4.86 8.83
2014 25,981 183 0.04 120 0.02 (86.85) 0.00 4.03 2014 248.22 30.53 1.53 0.00 0.62 29.58
2015 30,345 1,078 0.22 1,181 0.24 882.68 0.10 4.15 2015 25.26 9.61 1.48 1.63 5.95 32.00
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2016E 34,805 1,912 0.39 1,912 0.39 61.95 0.18 4.37 2016E 15.60 6.53 1.41 2.88 9.25 27.54
2017E 38,516 1,934 0.40 1,934 0.40 1.13 0.18 4.59 2017E 15.42 6.12 1.34 2.92 8.90 22.04
Figure 1: AAV’s PER band and sensitivity of market prices based on PER at different standard deviation levels 2016E +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD ‐2.5SD
(X) 45 40 35 +1.0 S.D. 30 Avg.
25 20
-0.50S.D.
15
Feb-16
May-16
Nov-15
Aug-15
Feb-15
May-15
Nov-14
Aug-14
Feb-14
May-14
Nov-13
Aug-13
Feb-13
May-13
Nov-12
Aug-12
-1 .0S.D.
May-12
10
PER (x) 29.9 26.6 23.3 20.0 16.8 13.5 10.2 6.9
Implied market price (Bt) 11.76 10.47 9.18 7.89 6.60 5.31 4.02 2.73
Upside/Downside vs. current market price (%) 91.2 70.3 49.3 28.3 7.3 (13.7) (34.7) (55.6)
Source: Bloomberg, KT ZMICO Research
Figure 2: Peer comparison COUNTRY
PER (x) 15
16E
PBV (x)
Yield (%)
ROE (%)
EV/EBITDA (x)
17E
15
16E
17E
15
16E
17E
15
16E
17E
15
16E
17E 7.6
LCC 6.6
7.0
6.2
0.8
1.0
0.8
0.0
2.6
2.9
12.0
15.9
14.8
6.0
7.9
12.4
10.8
10.2
1.3
1.2
1.2
6.6
7.1
7.3
10.2
12.5
12.9
8.3
7.5
7.2
7.5
6.7
6.8
2.0
1.6
1.3
2.2
2.5
2.6
28.7
24.2
20.7
5.6
5.5
5.4
Britain
12.8
10.1
8.8
3.1
2.3
1.9
3.1
4.3
4.7
24.8
23.9
23.8
8.0
6.2
5.4
Ireland
17.8
14.3
11.7
3.8
3.9
3.1
0.0
2.3
1.0
23.7
30.8
29.3
10.5
9.0
7.6
SOUTHWEST AIRLINES
USA
12.2
10.2
9.5
3.8
3.2
2.4
0.7
0.8
0.8
30.9
33.4
27.5
5.5
5.0
4.8
AIR ASIA BHD
Malaysia
AIRARABI
UAE
CEBU AIR INC
Philippines
EASYJET PLC RYANAIR HOLDINGS PLC TIGER AIRWAYS HLDG
Singapore
n.a.
n.a.
20.9
4.0
4.9
4.1
0.0
0.0
0.0
n.m.
5.7
20.6
n.m.
17.7
11.4
VIRGIN AUSTRALIA HLDG
Australia
n.a.
15.9
8.8
1.4
1.4
1.2
0.0
0.0
0.2
(10.4)
8.3
16.5
16.3
6.3
4.9
WESTJET AIRLINES LTD
Canada
6.6
8.4
8.3
1.3
1.1
1.0
2.7
3.0
3.1
19.8
13.5
12.3
2.9
3.2
3.1
10.8
10.4
10.1
2.4
2.3
1.9
1.7
2.5
2.5
17.5
18.7
19.8
7.9
7.6
6.4
Conventional CHINA SOUTHERN AIRLINES‐H China
6.8
5.3
5.4
1.0
0.9
0.8
2.2
2.2
3.6
15.3
16.1
14.4
4.3
4.0
3.8
AIR CHINA LTD‐H
China
5.8
5.3
5.5
0.9
0.8
0.7
2.5
2.6
3.0
11.8
14.4
12.8
5.1
4.8
4.6
CATHAY PACIFIC AIRWAYS
Hong Kong
6.0
5.5
5.0
1.1
0.9
0.8
1.1
1.2
1.5
18.3
16.7
16.0
5.4
4.9
4.6
CHINA EASTERN AIRLINES‐H
China
8.8
8.6
8.2
1.1
1.0
0.9
3.9
4.1
4.4
12.0
12.5
12.0
6.2
5.5
5.4
KOREAN AIR LINES CO LTD
South Korea
38.1
19.2
14.6
1.1
1.0
1.0
1.8
3.4
4.0
2.9
5.6
7.5
5.2
4.2
3.7
SINGAPORE AIRLINES LTD
Singapore
n.a.
25.9
7.3
0.8
1.1
0.9
0.0
0.0
0.0
‐24.9
7.9
14.0
6.8
6.7
6.7
EVA AIRWAYS CORP
Taiwan
8.7
8.4
10.0
1.3
1.2
1.0
0.7
0.9
0.0
18.3
14.0
10.0
5.4
5.2
5.4
CHINA AIRLINES LTD
Taiwan
9.2
9.0
8.1
1.1
1.0
0.9
0.4
0.2
0.0
12.5
11.5
10.2
5.6
5.4
5.7
11.9
10.9
8.0
1.1
1.0
0.9
1.6
1.8
2.1
8.3
12.3
12.1
5.5
5.1
5.0
Average (simple)
Average (simple)
Source: Bloomberg
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A expense EBITDA Depreciation & amortization EBIT Interest expense Equity earnings Other income / exp. EBT Corporate tax Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity CASH FLOW (Btm) Net income Depreciation & amortization Change in working capital FX, non‐cash adjustment & others Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) Core EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%) FINANCIAL QUALITY Total debt to capital employed (x) Net debt to equity (x)
2013 23,994 (19,928) 4,066 (1,756) 2,712 (402) 2,310 (171) 0 291 2,430 (651) (736) 1,043 0.22 0.22 914 0.19 0.00
2014 25,981 (23,708) 2,273 (1,925) 1,166 (818) 348 (313) 0 231 267 1 (85) 183 0.04 0.04 120 0.02 0.00
2015 30,345 (25,315) 5,030 (2,377) 3,775 (1,122) 2,653 (457) 0 16 2,212 (151) (982) 1,078 0.22 0.22 1,181 0.24 0.10
2016E 34,805 (28,095) 6,710 (2,543) 5,422 (1,255) 4,167 (515) 0 76 3,728 (186) (1,629) 1,912 0.39 0.39 1,912 0.39 0.18
2013 6,453 90 10,956 27,436 44,935 615 7,546 18,260 7,329 19,346 44,935
2014 6,298 97 16,033 27,073 49,502 959 11,118 22,486 7,482 19,534 49,502
2015 7,591 94 18,216 26,926 52,827 1,261 12,775 24,743 7,941 20,142 52,827
2016E 7,587 145 20,814 27,252 55,798 1,271 12,152 25,033 9,570 21,195 55,798
2013 1,043 402 2,445 131 4,020 (2,082) (3,483) (5,565) (348) 0 0 0 (348) (1,894) (1,545) (0.32)
2014 183 818 654 194 1,848 (980) 3,004 2,025 (1,043) 0 0 0 (1,043) 2,830 3,873 0.80
2015 1,078 1,122 (345) 1,152 3,007 615 268 883 (2,556) 0 0 0 (2,556) 1,334 3,890 0.80
2016E 1,912 1,255 (1,163) 0 2,004 (910) 0 (910) (613) 0 (485) 0 (1,098) (4) 1,094 0.23
2013 46.2 64.6 13.7 16.9 11.3 9.6 4.3 3.8 26.8
2014 8.3 (57.0) (86.8) 8.7 4.5 1.3 0.7 0.5 (0.5)
2015 16.8 223.7 882.7 16.6 12.4 8.7 3.6 3.9 6.8
2016E 14.7 43.6 61.9 19.3 15.6 12.0 5.5 5.5 5.0
2013 0.30 0.09
2014 0.38 0.30
2015 0.41 0.32
2016E 0.39 0.28
2017E 38,516 (31,496) 7,021 (2,827) 5,672 (1,478) 4,193 (504) 0 81 3,770 (189) (1,648) 1,934 0.40 0.40 1,934 0.40 0.18
2017E 8,542 161 23,297 27,417 59,418 1,577 11,872 25,941 11,217 22,259 59,418
2017E 1,934 1,478 99 0 3,511 (1,721) 0 (1,721) 25 0 (860) 0 (835) 956 1,791 0.37
2017E 10.7 4.6 1.1 18.2 14.7 10.9 5.0 5.0 5.0 2017E 0.38 0.22
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investment in the securities of KTB and ZMICO, investor should consider risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, PLE, TPOLY, BIGC, BJC. KT ZMICO is a co‐underwriter of TPBI.
Anti‐corruption Progress Indicator
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
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KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
