Asia Aviation
Asia Aviation Outperform (18E TP Bt6.20)
Company Update
Close Bt6.15
Transport & Logistics August 15, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
More favorable 2H outlook Price Performance (%)
Maintain “Outperform” with TP rolled over to the 18E TP at Bt6.20 Although we lower AAV’s earnings in 2017‐18E owing mainly to cost adjustments, our view that AAV’s earnings will improve in 2H17E remains unchanged, especially for 4Q17E due to the seasonal pattern and the benefit from the government’s policy to encourage domestic travel. We thus maintain our “Outperform” rating with the TP rolled over to 2018E at Bt6.20 (based on 20x PER, +0.5SD). Personnel and airport service costs increased in 2Q17 In 2Q17, AAV’s earnings missed our expectation due to an increase of costs related to personnel and airport operations. AAV increased benefits to employees, especially for pilots and engineers, in an attempt to retain valued employees in the face of intense competition in the airline industry. Meanwhile, airport service benefits from many airports in China have ended, resulting in higher costs related to airport operations. Seeking to enhance ancillary income In 2Q17, ancillary income per passenger continued declining (‐3% YoY to Bt307/pax). AAV is seeking to enhance this revenue using dynamic pricing for pre‐booked baggage and seat selections. However, we believe this revenue will improve after an increase in international passengers, which may be seen in 2018E or after Thai Air Asia X (TAAX) can feed more passengers to AAV.
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.383
0.439
KT ZMICO vs. consensus Share data
‐32.1%
‐29.4%
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 (%)
30.00/897.00 0.10/0.09
52 week High / Low (Bt)
7.80/5.35
Avg. daily T/O (shares 000)
33,563.00
NVDR (%)
7.78
Estimated free float (%)
63.94
Beta
1.33
URL
www.aavplc.co.th
CGR
Anti‐corruption
n.a.
Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695‐5836
Good response to new destinations In 3Q17, AAV will add three new routes, two in India and another to the Maldives, scheduled to operate this month. According to AAV, the Maldives destination is quite good (high load factor). Including new destinations, the number of routes to India will increase to six vs. four currently. In the longer term, AAV plans to lower China’s contribution to the route network, especially from charter flights, owing to competition. Revise down norm. profit projections in 2017‐18E by 23% and 12% We revise down AAV’s earnings in 2017‐18E by 23% and 12%, respectively, owing mainly to cost adjustments as occurred in 2Q17. We maintain passenger volume and average ticket fares in 2017‐18E, but lower average ancillary income/pax as we do not yet expect it to improve significantly. We revise up the cabin factor for both years owing to AAV’s effective route network and fleet utilization, which resulted in a higher‐than‐ expected cabin factor in 1H17. 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 (%)
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
2016 33,054 1,869 0.39 1,909 0.40 61.68 0.15 4.39 2016 15.62 7.86 1.40 2.44 9.22 41.00
2017E 36,793 1,259 0.26 1,157 0.24 (39.40) 0.09 4.54 2017E 25.78 9.89 1.35 1.51 5.34 46.28
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2018E 40,541 1,507 0.31 1,507 0.31 30.22 0.12 4.73 2018E 19.80 8.22 1.30 1.97 6.70 42.70
2019E 43,453 1,667 0.34 1,667 0.34 10.63 0.13 4.94 2019E 17.89 7.40 1.24 2.17 7.10 38.81
Figure 1: AAV’s PER band and sensitivity of market prices based on PER at different standard deviation levels (X)
2017E +1.5SD +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD
45 40 35 +1.0 S.D.
30 25
Avg.
20
-0.50S.D.
15
-1 .0S.D.
Apr-17
Dec-16
Sep-16
Feb-16
May-16
Jul-15
Oct-15
Apr-15
Dec-14
Sep-14
Feb-14
May-14
Nov-13
Jul-13
Apr-13
Dec-12
May-12
Sep-12
10
PER (x) 32.1 29.0 25.9 22.8 19.7 16.6 13.6 10.5
Implied market price (Bt) 7.70 6.96 6.22 5.48 4.74 4.00 3.25 2.51
Upside/Downside vs. current market price (%) 25.2 13.2 1.1 (10.9) (23.0) (35.0) (47.1) (59.1)
Source: Bloomberg, KT ZMICO Research
Figure 2: Key changes to our assumptions and revision to the earnings forecasts of AAV
2017E
Ended Dec
Current
Passengers carried (mn)
19.5
Change (% YoY)
13.0
Average fare (Bt/passenger) Change (% YoY) Average ancillary (Bt/passenger) Change (% YoY) Cabin factor (%) Revenue (Btmn) Norm. profit (Btmn) Net profit (Btmn)
2018E
Previous 19.5 13.0
% chg
Current
Previous
% chg
0.0
21.4
21.4
10.0
10.0
0.0
1,534
1,534
0.0
1,534
1,534
0.0
(2.0)
(2.0)
0.0
0.0
316
336
(6.0)
313
332
(5.7)
(3.0)
3.0
0.0
1.0
87.0
85.0
40,541
40,776
(0.6)
86.0
85.0
36,793
37,003
(0.6)
1,157
1,494
(22.6)
1,507
1,717
(12.2)
(20.4)
1,507
1,717
(12.2)
1,259
1,581
Source: KT ZMICO Research
Figure 3: Network development
Source: AAV
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)
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
2016 33,054 (26,688) 6,366 (2,636) 4,907 (1,177) 3,730 (521) 0 37 3,246 191 (1,568) 1,869 0.39 0.39 1,909 0.39 0.15
2017E 36,793 (30,938) 5,855 (3,146) 4,049 (1,341) 2,709 (668) 0 165 2,206 0 (947) 1,259 0.26 0.26 1,157 0.24 0.09
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
2016 6,733 118 20,425 29,323 56,599 1,792 13,664 26,479 8,850 21,271 56,599
2017E 5,061 143 23,698 29,331 58,232 1,273 13,988 26,396 9,796 22,040 58,232
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 1,122 722 1,152 4,074 (452) 268 (184) (2,073) 0 (483) 0 (2,556) 1,334 3,890 0.80
2016 1,869 1,177 1,282 53 4,382 (1,320) (2,203) (3,522) (2,336) 0 (722) 0 (3,058) (2,198) 860 0.18
2017E 1,259 1,341 (264) (102) 2,234 (2,248) 0 (2,248) (194) 0 (728) 0 (921) (935) (14) 0.00
2014 8.3 (57.0) (86.9) 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
2016 8.9 30.0 61.7 19.3 14.8 11.3 5.7 5.8 (5.9)
2017E 11.3 (17.5) (39.4) 15.9 11.0 7.4 3.4 3.1 0.0
2014 0.38 0.30
2015 0.41 0.32
2016 0.42 0.41
2017E 0.41 0.46
2018E 40,541 (33,731) 6,809 (3,494) 4,823 (1,508) 3,316 (635) 0 58 2,739 0 (1,233) 1,507 0.31 0.31 1,507 0.31 0.12
2018E 5,888 157 25,982 29,552 61,579 1,420 14,271 27,590 11,029 22,960 61,579
2019E 6,729 169 28,277 29,739 64,914 1,567 14,469 28,543 12,393 23,978 64,914
2018E 1,507 1,508 62 0 3,076 (2,229) 0 (2,229) 430 0 (450) 0 (20) 827 847 0.17
2019E 43,453 (36,051) 7,402 (3,788) 5,288 (1,675) 3,614 (650) 0 67 3,031 0 (1,364) 1,667 0.34 0.34 1,667 0.34 0.13
2019E 1,667 1,675 48 0 3,389 (2,306) 0 (2,306) 344 0 (586) 0 (242) 842 1,083 0.22
2018E 10.2 19.1 30.2 16.8 11.9 8.2 3.7 3.7 0.0
2019E 7.2 9.6 10.6 17.0 12.2 8.3 3.8 3.8 0.0
2018E 0.41 0.43
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2019E 0.40 0.39
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the 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, M‐CHAI, POMPUI, TTL, NMG, SAWAD.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
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
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant catalysts SELL: Expecting negative total returns of 10% or more primary market index by 10% over the next 12 months. over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
Company Update
Close Bt6.15
Transport & Logistics August 15, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
More favorable 2H outlook Price Performance (%)
Maintain “Outperform” with TP rolled over to the 18E TP at Bt6.20 Although we lower AAV’s earnings in 2017‐18E owing mainly to cost adjustments, our view that AAV’s earnings will improve in 2H17E remains unchanged, especially for 4Q17E due to the seasonal pattern and the benefit from the government’s policy to encourage domestic travel. We thus maintain our “Outperform” rating with the TP rolled over to 2018E at Bt6.20 (based on 20x PER, +0.5SD). Personnel and airport service costs increased in 2Q17 In 2Q17, AAV’s earnings missed our expectation due to an increase of costs related to personnel and airport operations. AAV increased benefits to employees, especially for pilots and engineers, in an attempt to retain valued employees in the face of intense competition in the airline industry. Meanwhile, airport service benefits from many airports in China have ended, resulting in higher costs related to airport operations. Seeking to enhance ancillary income In 2Q17, ancillary income per passenger continued declining (‐3% YoY to Bt307/pax). AAV is seeking to enhance this revenue using dynamic pricing for pre‐booked baggage and seat selections. However, we believe this revenue will improve after an increase in international passengers, which may be seen in 2018E or after Thai Air Asia X (TAAX) can feed more passengers to AAV.
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.383
0.439
KT ZMICO vs. consensus Share data
‐32.1%
‐29.4%
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 (%)
30.00/897.00 0.10/0.09
52 week High / Low (Bt)
7.80/5.35
Avg. daily T/O (shares 000)
33,563.00
NVDR (%)
7.78
Estimated free float (%)
63.94
Beta
1.33
URL
www.aavplc.co.th
CGR
Anti‐corruption
n.a.
Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695‐5836
Good response to new destinations In 3Q17, AAV will add three new routes, two in India and another to the Maldives, scheduled to operate this month. According to AAV, the Maldives destination is quite good (high load factor). Including new destinations, the number of routes to India will increase to six vs. four currently. In the longer term, AAV plans to lower China’s contribution to the route network, especially from charter flights, owing to competition. Revise down norm. profit projections in 2017‐18E by 23% and 12% We revise down AAV’s earnings in 2017‐18E by 23% and 12%, respectively, owing mainly to cost adjustments as occurred in 2Q17. We maintain passenger volume and average ticket fares in 2017‐18E, but lower average ancillary income/pax as we do not yet expect it to improve significantly. We revise up the cabin factor for both years owing to AAV’s effective route network and fleet utilization, which resulted in a higher‐than‐ expected cabin factor in 1H17. 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 (%)
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
2016 33,054 1,869 0.39 1,909 0.40 61.68 0.15 4.39 2016 15.62 7.86 1.40 2.44 9.22 41.00
2017E 36,793 1,259 0.26 1,157 0.24 (39.40) 0.09 4.54 2017E 25.78 9.89 1.35 1.51 5.34 46.28
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2018E 40,541 1,507 0.31 1,507 0.31 30.22 0.12 4.73 2018E 19.80 8.22 1.30 1.97 6.70 42.70
2019E 43,453 1,667 0.34 1,667 0.34 10.63 0.13 4.94 2019E 17.89 7.40 1.24 2.17 7.10 38.81
Figure 1: AAV’s PER band and sensitivity of market prices based on PER at different standard deviation levels (X)
2017E +1.5SD +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD
45 40 35 +1.0 S.D.
30 25
Avg.
20
-0.50S.D.
15
-1 .0S.D.
Apr-17
Dec-16
Sep-16
Feb-16
May-16
Jul-15
Oct-15
Apr-15
Dec-14
Sep-14
Feb-14
May-14
Nov-13
Jul-13
Apr-13
Dec-12
May-12
Sep-12
10
PER (x) 32.1 29.0 25.9 22.8 19.7 16.6 13.6 10.5
Implied market price (Bt) 7.70 6.96 6.22 5.48 4.74 4.00 3.25 2.51
Upside/Downside vs. current market price (%) 25.2 13.2 1.1 (10.9) (23.0) (35.0) (47.1) (59.1)
Source: Bloomberg, KT ZMICO Research
Figure 2: Key changes to our assumptions and revision to the earnings forecasts of AAV
2017E
Ended Dec
Current
Passengers carried (mn)
19.5
Change (% YoY)
13.0
Average fare (Bt/passenger) Change (% YoY) Average ancillary (Bt/passenger) Change (% YoY) Cabin factor (%) Revenue (Btmn) Norm. profit (Btmn) Net profit (Btmn)
2018E
Previous 19.5 13.0
% chg
Current
Previous
% chg
0.0
21.4
21.4
10.0
10.0
0.0
1,534
1,534
0.0
1,534
1,534
0.0
(2.0)
(2.0)
0.0
0.0
316
336
(6.0)
313
332
(5.7)
(3.0)
3.0
0.0
1.0
87.0
85.0
40,541
40,776
(0.6)
86.0
85.0
36,793
37,003
(0.6)
1,157
1,494
(22.6)
1,507
1,717
(12.2)
(20.4)
1,507
1,717
(12.2)
1,259
1,581
Source: KT ZMICO Research
Figure 3: Network development
Source: AAV
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)
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
2016 33,054 (26,688) 6,366 (2,636) 4,907 (1,177) 3,730 (521) 0 37 3,246 191 (1,568) 1,869 0.39 0.39 1,909 0.39 0.15
2017E 36,793 (30,938) 5,855 (3,146) 4,049 (1,341) 2,709 (668) 0 165 2,206 0 (947) 1,259 0.26 0.26 1,157 0.24 0.09
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
2016 6,733 118 20,425 29,323 56,599 1,792 13,664 26,479 8,850 21,271 56,599
2017E 5,061 143 23,698 29,331 58,232 1,273 13,988 26,396 9,796 22,040 58,232
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 1,122 722 1,152 4,074 (452) 268 (184) (2,073) 0 (483) 0 (2,556) 1,334 3,890 0.80
2016 1,869 1,177 1,282 53 4,382 (1,320) (2,203) (3,522) (2,336) 0 (722) 0 (3,058) (2,198) 860 0.18
2017E 1,259 1,341 (264) (102) 2,234 (2,248) 0 (2,248) (194) 0 (728) 0 (921) (935) (14) 0.00
2014 8.3 (57.0) (86.9) 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
2016 8.9 30.0 61.7 19.3 14.8 11.3 5.7 5.8 (5.9)
2017E 11.3 (17.5) (39.4) 15.9 11.0 7.4 3.4 3.1 0.0
2014 0.38 0.30
2015 0.41 0.32
2016 0.42 0.41
2017E 0.41 0.46
2018E 40,541 (33,731) 6,809 (3,494) 4,823 (1,508) 3,316 (635) 0 58 2,739 0 (1,233) 1,507 0.31 0.31 1,507 0.31 0.12
2018E 5,888 157 25,982 29,552 61,579 1,420 14,271 27,590 11,029 22,960 61,579
2019E 6,729 169 28,277 29,739 64,914 1,567 14,469 28,543 12,393 23,978 64,914
2018E 1,507 1,508 62 0 3,076 (2,229) 0 (2,229) 430 0 (450) 0 (20) 827 847 0.17
2019E 43,453 (36,051) 7,402 (3,788) 5,288 (1,675) 3,614 (650) 0 67 3,031 0 (1,364) 1,667 0.34 0.34 1,667 0.34 0.13
2019E 1,667 1,675 48 0 3,389 (2,306) 0 (2,306) 344 0 (586) 0 (242) 842 1,083 0.22
2018E 10.2 19.1 30.2 16.8 11.9 8.2 3.7 3.7 0.0
2019E 7.2 9.6 10.6 17.0 12.2 8.3 3.8 3.8 0.0
2018E 0.41 0.43
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2019E 0.40 0.39
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the 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, M‐CHAI, POMPUI, TTL, NMG, SAWAD.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
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
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant catalysts SELL: Expecting negative total returns of 10% or more primary market index by 10% over the next 12 months. over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
