Airports of Thailand - Global Alliance Partners
Airports of Thailand Outperform (FY17E TP Bt435.00)
Company Update
Close Bt393.00
Transport & Logistics December 28, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Temporarily negative short‐term sentiment Price Performance (%)
International passenger volume growth likely to turn positive in Dec‐16 AOT’s passenger volume in Nov‐16 still expanded by 3.1% YoY, led by domestic passengers (+9.1% YoY), while international passengers fell by 1.6% YoY given the impact of the crackdown on zero‐dollar tours (from Chinese destinations). The figures were in line with international tourist arrivals to Thailand in Nov‐16 from the Department of Tourism that fell by 4.4% YoY to 2.45mn, led by Chinese tourists (‐30% YoY); meanwhile, tourists from Europe still expanded by 8% YoY, led by Russia (+24% YoY). Based on the normal high season of tourist arrivals from Europe (winter holidays), we believe AOT’s international passenger volume in Dec‐16 will likely turn slightly positive.
Source: SET Smart Consensus EPS (Bt) KT ZMICO vs. consensus Share data Reuters / Bloomberg
FY17
FY18
15.206
17.022
4.8%
3.5%
AOT.BK/AOT TB
Paid‐up Shares (m)
1,428.57
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
561.00/15,591.00
Foreign limit / actual (%)
30.00/13.95
52 week High / Low (Bt)
430.00/300.00
Avg. daily T/O (shares 000) NVDR (%)
3,422.00 3.50
Estimated free float (%)
29.99
Beta
1.02
URL
www.airportthai.co.th
CGR
Anti‐corruption
‐
Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695‐5836
Reiterate “Outperform” We maintain our “Outperform” rating with the DCF‐based TP of Bt435 (implied 27x PER) for AOT given the expectation that earnings in FY17‐ 18E will achieve +14% CAGR owing to conservative passenger volume growth (+7% pa.) and the concession revenue contribution from the new terminals at DMK and Phuket. We believe our valuation is justified compared with +6% CAGR average earnings growth for regional peers with average PER of 17x. Short‐term pressure on the share price from the temporary stumble of Chinese tourist arrivals should provide an opportunity to accumulate.
1QFY17E net profit to grow 10% YoY, partly from FX gains We expect AOT to deliver net profit of Bt5.1bn in 1QFY17E (Oct‐Dec 16) based on estimated passenger volume of 30.7mn, +6% YoY and +3% QoQ, mainly from domestic (+2% for international, +11% for domestic). Revenue will likely increase by 7% YoY to Bt12.6bn owing mainly to the revenue contribution from the APPS system, while we expect average PSC and concession/pax to slightly decline given a higher portion of domestic passengers. Earnings will likely grow by 10% YoY and 18% QoQ, partly due to expected huge FX gains of Bt240mn given the Thai baht’s strengthening relative to the Japanese yen. Stripping out FX gains, AOT will likely report normalized profit of Bt4.8bn, growing by 5% YoY and 11% QoQ. Net profit in 1QFY17E will likely account for 22% of our full‐ year projection, as we believe international passengers will ramp up for the rest of this year. Financials and Valuation FY Ended 30 Sep Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. profit (Btmn) Norm. EPS (Bt) Norm. EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 30 Sep Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
FY15 43,969 18,729 13.11 15,755 11.03 30.97 6.54 76.01 FY15 29.98 20.46 5.17 1.66 15.32 cash
FY16 50,962 19,571 13.70 19,371 13.56 22.95 6.83 84.93 FY16 28.69 17.37 4.63 1.74 16.85 cash
FY17E 56,053 22,761 15.93 22,761 15.93 17.50 7.94 92.91 FY17E 24.67 15.38 4.23 2.02 17.92 cash
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
FY18E 60,549 25,158 17.61 25,158 17.61 10.53 8.78 101.75 FY18E 22.32 14.42 3.86 2.23 18.09 cash
FY19E 65,908 27,789 19.45 27,789 19.45 10.46 9.70 111.50 FY19E 20.20 13.39 3.52 2.47 18.24 cash
Figure 1: Summary of assumptions for DCF‐based valuation for AOT 5.00 14.50 9.50 12.70 30.00 3.00 10.00
Risk‐free rate (Rf) % Market return (Rm)% Market risk premium (Rm‐Rf) % Cost of equity (Ke) % Debt‐to‐capital ratio (%) Perpetual growth rate (%) WACC (%)
Present value of free cash flow (FY17‐29E) Present value of terminal value Total present value of FCF Less: net debt (cash) as of end‐FY17E Total equity value Outstanding shares at end‐FY17E Equity value / share (Bt)
(Btmn) 251,546 338,320 589,866 (31,553) 621,419 1,429 435
Source: KT ZMICO Research
Figure 2: Peer comparison COUNTRY
17‐18E Mkt Cap
Beijing Capital Intl
China
Shanghai International
China
PER (x)
CAGR US$mn 16E 11.6 4,074 15.6 11.6 7,362 18.1 17.3 2,393 27.0
PBV (x)
Yield (%)
ROE (%)
17E 13.9 16.0
18E 12.5 14.5
16E 1.5 2.3
17E 1.4 2.1
18E 1.3 1.9
16E 2.5 1.7
17E 2.8 1.9
18E 3.1 1.9
16E 9.8 13.0
17E 10.2 13.3
EV/EBITDA (x) 18E 10.6 13.4
16E 8.0 12.0
17E 7.6 10.7
18E 7.4 9.9 9.7
Shenzhen Airport
China
22.4
19.6
1.5
1.5
1.4
0.8
1.0
1.1
5.7
6.5
6.9
11.9
10.3
Xiamen Intl.
China
4.7
968
16.2
15.2
14.7
2.0
1.8
1.6
1.8
2.0
2.1
12.8
12.1
11.2
9.3
8.9
8.5
Guangzhou Baiyun Intl
China
(8.5)
2,360
12.2
11.7
14.6
1.6
1.4
1.3
2.5
2.6
1.7
13.7
12.9
8.6
6.8
6.5
7.0
United Arrow
Japan
(0.3)
881
21.7
17.9
16.0
4.2
2.9
2.6
1.7
2.3
2.4
20.0
16.1
17.3
10.8
9.6
8.8
Singapore Airport Terminal
Singapore
7.5
3,738
19.8
22.3
21.1
2.9
3.4
3.3
3.8
3.4
3.7
15.0
16.0
15.8
14.3
16.5
15.9
Average (simple)
6.3
18.7
17.0
16.2
2.3
2.1
1.9
2.1
2.3
2.3
12.9
12.5
12.0
10.4
10.0
9.6
Source: KT ZMICO Research
Figure 3: AOT’s PER band and sensitivity of market prices based on PER at different standard deviation levels (X) 60 50
+1.0 S.D.
30
+0.5 S.D.
Dec-16
Apr-16
Sep-15
Jan-15
Jun-14
Oct-13
Feb-13
Jul-12
Apr-11
May-09
Aug-10
-1.0 S.D.
0
Avg.
Jan-10
-0.5 S.D.
10
Oct-08
20
Nov-11
40
FY17E +1.5SD +1.0SD +0.5SD average ‐0.5SD ‐1.0SD
PER (x) 37.0 32.3 27.7 23.0 18.4 13.7
Implied market price (Bt) 589 515 441 367 293 218
Upside/Downside vs. current market price (%) 48.70 29.99 11.29 (7.42) (26.12) (44.83)
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 4: Passenger volume and flight movements growth trend (%YoY) for AOT’s airports Passenger volume Jul‐16 Aug‐16 Sep‐16 Oct‐16 Nov‐16 Flight movements Jul‐16 Aug‐16 Sep‐16 Oct‐16 Nov‐16
Total 6 airports International Domestic 12.9 15.2 9.0 9.4 16.8 13.0 4.3 8.3 (1.6) 9.1 9.2 8.3 11.5 3.2 1.2
Total
9.4 7.9 10.5 6.1 7.1
International 7.0 1.6 11.8 2.7 (3.7) 4.6 3.1 9.3 3.1 (1.0)
13.9 9.2 15.1 6.1 3.1
9.7 7.5 9.6 9.0 13.3
SBIA Domestic
Total
International
13.9 8.2 13.7 13.5 14.5
8.1 2.7 12.1 4.6 (0.6)
8.1 10.6 9.7 13.9 13.8
5.4 4.7 9.4 5.5 2.3
36.5 36.9 34.8 9.3 1.9 24.0 24.9 17.6 3.7 3.9
DMK Domestic
Total
12.9 8.3 9.8 3.4 4.3
20.2 17.2 17.1 5.1 3.6
6.5 2.3 5.4 2.5 9.5
11.7 9.0 9.0 2.9 7.8
Source: AOT
Figure 5: 1QFY17E earnings preview Profit / Loss Year‐end 30 Sep Revenue Operating expenses Operating profit EBITDA Interest expenses Other income Income tax Forex gain (loss) Other extra items Net profit (loss) Normalized profit (loss) Reported EPS (Bt) Operating margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt/equity (x) BVPS (Bt) ROE (%)
1QFY16 11,814 (5,951) 5,863 7,443 (361) 341 (1,229) 22 ‐ 4,626 4,604 3.24
4QFY16 12,775 (7,341) 5,434 7,046 (329) 326 (1,053) 22 (79) 4,314 4,371 3.02
1QFY17E 12,640 (6,580) 6,060 7,660 (319) 330 (1,222) 240 ‐ 5,080 4,839 3.56
% YoY 7.0 10.6 3.4 2.9 (11.5) (3.2) (0.6) 982.6 ‐ 9.8 5.1 9.8
% QoQ (1.1) (10.4) 11.5 8.7 (2.9) 1.1 16.0 968.4 ‐ 17.7 10.7 17.7
FY16 50,962 (26,718) 24,244 30,648 (1,377) 1,357 (4,821) (185) 386 19,571 19,371 13.70
FY17E 56,053 (27,785) 28,268 34,457 (1,232) 1,481 (5,719) ‐ ‐ 22,761 22,761 15.93
49.6 63.0 39.2 3.8 16.2 0.3 79.0 16.7
42.5 55.2 33.8 3.5 16.5 0.3 84.9 14.8
47.9 60.5 40.2
47.6 60.1 38.4 3.5 17.6 0.3 84.9 16.9
50.4 61.5 40.6 3.7 22.9 0.2 92.9 17.9
% YoY 10.0 4.0 16.6 12.4 (10.5) 9.2 18.6 ‐ ‐ 16.3 17.5 16.3
YTD (% of 17E) 22.3 23.6 21.1 22.0 25.9 22.3 21.1 ‐ ‐ 22.0 20.9 22.0
Source: AOT, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Operating profit SG&A EBITDA Depreciation & amortization EBIT Interest expenses 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 (%) Operating 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)
FY14 37,585 (22,493) 15,093 0 20,743 (5,650) 15,093 (1,836) 0 2,012 15,269 (3,007) (42) 12,220 8.55 8.55 12,029 8.42 3.40
FY15 43,969 (23,539) 20,430 0 26,618 (6,188) 20,430 (1,605) 0 4,511 23,335 (4,585) (21) 18,729 13.11 13.11 15,755 11.03 6.54
FY16 50,962 (26,718) 24,244 0 30,648 (6,404) 24,244 (1,377) 0 1,557 24,424 (4,821) (32) 19,571 13.70 13.70 19,371 13.56 6.83
FY17E 56,053 (27,785) 28,268 0 34,457 (6,189) 28,268 (1,232) 0 1,481 28,516 (5,719) (37) 22,761 15.93 15.93 22,761 15.93 7.94
FY14 43,203 195 94,282 16,109 153,789 3,971 30,638 56,541 203 97,044 153,789
FY15 48,490 238 95,253 15,643 159,624 4,228 27,493 50,812 225 108,588 159,624
FY16 60,490 261 91,692 19,773 172,216 4,797 26,659 50,638 257 121,322 172,216
FY17E 58,248 263 99,749 19,635 177,895 3,850 22,839 44,940 220 132,736 177,895
FY14 12,220 5,650 1,033 38 18,941 (9,559) 3,627 (5,932) (6,008) 0 (6,571) 0 (12,578) 431 13,010 9.11
FY15 18,729 6,188 186 (197) 24,906 (6,835) (9,244) (16,079) (5,734) 0 (7,057) 0 (12,790) (3,963) 8,827 6.18
FY16 19,571 6,404 3,908 441 30,325 (3,038) (11,684) (14,722) (5,661) 0 (7,142) 0 (12,803) 2,799 15,603 10.92
FY17E 22,761 6,189 (796) 0 28,154 (15,972) 0 (15,972) (4,767) 0 (9,657) 0 (14,424) (2,242) 12,182 8.53
FY14 2.1 4.6 21.1 40.2 55.2 32.5 32.0 19.7 2.1
FY15 17.0 28.3 31.0 46.5 60.5 42.6 35.8 19.6 17.0
FY16 15.9 15.1 23.0 47.6 60.1 38.4 38.0 19.7 15.9
FY17E 10.0 12.4 17.5 50.4 61.5 40.6 40.6 20.1 10.0
FY14 0.26 cash
FY15 0.23 cash
FY16 0.21 cash
FY17E 0.17 cash
FY18E 60,549 (29,279) 31,270 0 37,429 (6,159) 31,270 (1,092) 0 1,344 31,522 (6,322) (43) 25,158 17.61 17.61 25,158 17.61 8.78
FY19E 65,908 (31,246) 34,662 0 40,935 (6,273) 34,662 (956) 0 1,113 34,819 (6,983) (47) 27,789 19.45 19.45 27,789 19.45 9.70
FY18E 44,510 283 122,185 19,649 186,627 3,739 19,019 41,099 177 145,351 186,628
FY19E 32,332 308 144,466 19,874 196,980 3,702 15,310 37,563 130 159,286 196,980
FY18E 25,158 6,159 57 0 31,374 (29,833) 0 (29,833) (3,931) 0 (11,347) 0 (15,279) (13,738) 1,541 1.08
FY19E 27,789 6,273 (39) 0 34,022 (29,912) 0 (29,912) (3,746) 0 (12,542) 0 (16,288) (12,178) 4,110 2.88
FY18E 8.0 8.6 10.5 51.6 61.8 41.6 41.6 20.1 8.0
FY19E 8.9 9.4 10.5 52.6 62.1 42.2 42.2 20.1 8.9
FY18E 0.14 cash
FY19E 0.11 cash
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
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, PACE, M‐CHAI, PF. TFD, EVER.
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 UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
Company Update
Close Bt393.00
Transport & Logistics December 28, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Temporarily negative short‐term sentiment Price Performance (%)
International passenger volume growth likely to turn positive in Dec‐16 AOT’s passenger volume in Nov‐16 still expanded by 3.1% YoY, led by domestic passengers (+9.1% YoY), while international passengers fell by 1.6% YoY given the impact of the crackdown on zero‐dollar tours (from Chinese destinations). The figures were in line with international tourist arrivals to Thailand in Nov‐16 from the Department of Tourism that fell by 4.4% YoY to 2.45mn, led by Chinese tourists (‐30% YoY); meanwhile, tourists from Europe still expanded by 8% YoY, led by Russia (+24% YoY). Based on the normal high season of tourist arrivals from Europe (winter holidays), we believe AOT’s international passenger volume in Dec‐16 will likely turn slightly positive.
Source: SET Smart Consensus EPS (Bt) KT ZMICO vs. consensus Share data Reuters / Bloomberg
FY17
FY18
15.206
17.022
4.8%
3.5%
AOT.BK/AOT TB
Paid‐up Shares (m)
1,428.57
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
561.00/15,591.00
Foreign limit / actual (%)
30.00/13.95
52 week High / Low (Bt)
430.00/300.00
Avg. daily T/O (shares 000) NVDR (%)
3,422.00 3.50
Estimated free float (%)
29.99
Beta
1.02
URL
www.airportthai.co.th
CGR
Anti‐corruption
‐
Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695‐5836
Reiterate “Outperform” We maintain our “Outperform” rating with the DCF‐based TP of Bt435 (implied 27x PER) for AOT given the expectation that earnings in FY17‐ 18E will achieve +14% CAGR owing to conservative passenger volume growth (+7% pa.) and the concession revenue contribution from the new terminals at DMK and Phuket. We believe our valuation is justified compared with +6% CAGR average earnings growth for regional peers with average PER of 17x. Short‐term pressure on the share price from the temporary stumble of Chinese tourist arrivals should provide an opportunity to accumulate.
1QFY17E net profit to grow 10% YoY, partly from FX gains We expect AOT to deliver net profit of Bt5.1bn in 1QFY17E (Oct‐Dec 16) based on estimated passenger volume of 30.7mn, +6% YoY and +3% QoQ, mainly from domestic (+2% for international, +11% for domestic). Revenue will likely increase by 7% YoY to Bt12.6bn owing mainly to the revenue contribution from the APPS system, while we expect average PSC and concession/pax to slightly decline given a higher portion of domestic passengers. Earnings will likely grow by 10% YoY and 18% QoQ, partly due to expected huge FX gains of Bt240mn given the Thai baht’s strengthening relative to the Japanese yen. Stripping out FX gains, AOT will likely report normalized profit of Bt4.8bn, growing by 5% YoY and 11% QoQ. Net profit in 1QFY17E will likely account for 22% of our full‐ year projection, as we believe international passengers will ramp up for the rest of this year. Financials and Valuation FY Ended 30 Sep Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. profit (Btmn) Norm. EPS (Bt) Norm. EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 30 Sep Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
FY15 43,969 18,729 13.11 15,755 11.03 30.97 6.54 76.01 FY15 29.98 20.46 5.17 1.66 15.32 cash
FY16 50,962 19,571 13.70 19,371 13.56 22.95 6.83 84.93 FY16 28.69 17.37 4.63 1.74 16.85 cash
FY17E 56,053 22,761 15.93 22,761 15.93 17.50 7.94 92.91 FY17E 24.67 15.38 4.23 2.02 17.92 cash
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
FY18E 60,549 25,158 17.61 25,158 17.61 10.53 8.78 101.75 FY18E 22.32 14.42 3.86 2.23 18.09 cash
FY19E 65,908 27,789 19.45 27,789 19.45 10.46 9.70 111.50 FY19E 20.20 13.39 3.52 2.47 18.24 cash
Figure 1: Summary of assumptions for DCF‐based valuation for AOT 5.00 14.50 9.50 12.70 30.00 3.00 10.00
Risk‐free rate (Rf) % Market return (Rm)% Market risk premium (Rm‐Rf) % Cost of equity (Ke) % Debt‐to‐capital ratio (%) Perpetual growth rate (%) WACC (%)
Present value of free cash flow (FY17‐29E) Present value of terminal value Total present value of FCF Less: net debt (cash) as of end‐FY17E Total equity value Outstanding shares at end‐FY17E Equity value / share (Bt)
(Btmn) 251,546 338,320 589,866 (31,553) 621,419 1,429 435
Source: KT ZMICO Research
Figure 2: Peer comparison COUNTRY
17‐18E Mkt Cap
Beijing Capital Intl
China
Shanghai International
China
PER (x)
CAGR US$mn 16E 11.6 4,074 15.6 11.6 7,362 18.1 17.3 2,393 27.0
PBV (x)
Yield (%)
ROE (%)
17E 13.9 16.0
18E 12.5 14.5
16E 1.5 2.3
17E 1.4 2.1
18E 1.3 1.9
16E 2.5 1.7
17E 2.8 1.9
18E 3.1 1.9
16E 9.8 13.0
17E 10.2 13.3
EV/EBITDA (x) 18E 10.6 13.4
16E 8.0 12.0
17E 7.6 10.7
18E 7.4 9.9 9.7
Shenzhen Airport
China
22.4
19.6
1.5
1.5
1.4
0.8
1.0
1.1
5.7
6.5
6.9
11.9
10.3
Xiamen Intl.
China
4.7
968
16.2
15.2
14.7
2.0
1.8
1.6
1.8
2.0
2.1
12.8
12.1
11.2
9.3
8.9
8.5
Guangzhou Baiyun Intl
China
(8.5)
2,360
12.2
11.7
14.6
1.6
1.4
1.3
2.5
2.6
1.7
13.7
12.9
8.6
6.8
6.5
7.0
United Arrow
Japan
(0.3)
881
21.7
17.9
16.0
4.2
2.9
2.6
1.7
2.3
2.4
20.0
16.1
17.3
10.8
9.6
8.8
Singapore Airport Terminal
Singapore
7.5
3,738
19.8
22.3
21.1
2.9
3.4
3.3
3.8
3.4
3.7
15.0
16.0
15.8
14.3
16.5
15.9
Average (simple)
6.3
18.7
17.0
16.2
2.3
2.1
1.9
2.1
2.3
2.3
12.9
12.5
12.0
10.4
10.0
9.6
Source: KT ZMICO Research
Figure 3: AOT’s PER band and sensitivity of market prices based on PER at different standard deviation levels (X) 60 50
+1.0 S.D.
30
+0.5 S.D.
Dec-16
Apr-16
Sep-15
Jan-15
Jun-14
Oct-13
Feb-13
Jul-12
Apr-11
May-09
Aug-10
-1.0 S.D.
0
Avg.
Jan-10
-0.5 S.D.
10
Oct-08
20
Nov-11
40
FY17E +1.5SD +1.0SD +0.5SD average ‐0.5SD ‐1.0SD
PER (x) 37.0 32.3 27.7 23.0 18.4 13.7
Implied market price (Bt) 589 515 441 367 293 218
Upside/Downside vs. current market price (%) 48.70 29.99 11.29 (7.42) (26.12) (44.83)
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 4: Passenger volume and flight movements growth trend (%YoY) for AOT’s airports Passenger volume Jul‐16 Aug‐16 Sep‐16 Oct‐16 Nov‐16 Flight movements Jul‐16 Aug‐16 Sep‐16 Oct‐16 Nov‐16
Total 6 airports International Domestic 12.9 15.2 9.0 9.4 16.8 13.0 4.3 8.3 (1.6) 9.1 9.2 8.3 11.5 3.2 1.2
Total
9.4 7.9 10.5 6.1 7.1
International 7.0 1.6 11.8 2.7 (3.7) 4.6 3.1 9.3 3.1 (1.0)
13.9 9.2 15.1 6.1 3.1
9.7 7.5 9.6 9.0 13.3
SBIA Domestic
Total
International
13.9 8.2 13.7 13.5 14.5
8.1 2.7 12.1 4.6 (0.6)
8.1 10.6 9.7 13.9 13.8
5.4 4.7 9.4 5.5 2.3
36.5 36.9 34.8 9.3 1.9 24.0 24.9 17.6 3.7 3.9
DMK Domestic
Total
12.9 8.3 9.8 3.4 4.3
20.2 17.2 17.1 5.1 3.6
6.5 2.3 5.4 2.5 9.5
11.7 9.0 9.0 2.9 7.8
Source: AOT
Figure 5: 1QFY17E earnings preview Profit / Loss Year‐end 30 Sep Revenue Operating expenses Operating profit EBITDA Interest expenses Other income Income tax Forex gain (loss) Other extra items Net profit (loss) Normalized profit (loss) Reported EPS (Bt) Operating margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt/equity (x) BVPS (Bt) ROE (%)
1QFY16 11,814 (5,951) 5,863 7,443 (361) 341 (1,229) 22 ‐ 4,626 4,604 3.24
4QFY16 12,775 (7,341) 5,434 7,046 (329) 326 (1,053) 22 (79) 4,314 4,371 3.02
1QFY17E 12,640 (6,580) 6,060 7,660 (319) 330 (1,222) 240 ‐ 5,080 4,839 3.56
% YoY 7.0 10.6 3.4 2.9 (11.5) (3.2) (0.6) 982.6 ‐ 9.8 5.1 9.8
% QoQ (1.1) (10.4) 11.5 8.7 (2.9) 1.1 16.0 968.4 ‐ 17.7 10.7 17.7
FY16 50,962 (26,718) 24,244 30,648 (1,377) 1,357 (4,821) (185) 386 19,571 19,371 13.70
FY17E 56,053 (27,785) 28,268 34,457 (1,232) 1,481 (5,719) ‐ ‐ 22,761 22,761 15.93
49.6 63.0 39.2 3.8 16.2 0.3 79.0 16.7
42.5 55.2 33.8 3.5 16.5 0.3 84.9 14.8
47.9 60.5 40.2
47.6 60.1 38.4 3.5 17.6 0.3 84.9 16.9
50.4 61.5 40.6 3.7 22.9 0.2 92.9 17.9
% YoY 10.0 4.0 16.6 12.4 (10.5) 9.2 18.6 ‐ ‐ 16.3 17.5 16.3
YTD (% of 17E) 22.3 23.6 21.1 22.0 25.9 22.3 21.1 ‐ ‐ 22.0 20.9 22.0
Source: AOT, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Operating profit SG&A EBITDA Depreciation & amortization EBIT Interest expenses 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 (%) Operating 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)
FY14 37,585 (22,493) 15,093 0 20,743 (5,650) 15,093 (1,836) 0 2,012 15,269 (3,007) (42) 12,220 8.55 8.55 12,029 8.42 3.40
FY15 43,969 (23,539) 20,430 0 26,618 (6,188) 20,430 (1,605) 0 4,511 23,335 (4,585) (21) 18,729 13.11 13.11 15,755 11.03 6.54
FY16 50,962 (26,718) 24,244 0 30,648 (6,404) 24,244 (1,377) 0 1,557 24,424 (4,821) (32) 19,571 13.70 13.70 19,371 13.56 6.83
FY17E 56,053 (27,785) 28,268 0 34,457 (6,189) 28,268 (1,232) 0 1,481 28,516 (5,719) (37) 22,761 15.93 15.93 22,761 15.93 7.94
FY14 43,203 195 94,282 16,109 153,789 3,971 30,638 56,541 203 97,044 153,789
FY15 48,490 238 95,253 15,643 159,624 4,228 27,493 50,812 225 108,588 159,624
FY16 60,490 261 91,692 19,773 172,216 4,797 26,659 50,638 257 121,322 172,216
FY17E 58,248 263 99,749 19,635 177,895 3,850 22,839 44,940 220 132,736 177,895
FY14 12,220 5,650 1,033 38 18,941 (9,559) 3,627 (5,932) (6,008) 0 (6,571) 0 (12,578) 431 13,010 9.11
FY15 18,729 6,188 186 (197) 24,906 (6,835) (9,244) (16,079) (5,734) 0 (7,057) 0 (12,790) (3,963) 8,827 6.18
FY16 19,571 6,404 3,908 441 30,325 (3,038) (11,684) (14,722) (5,661) 0 (7,142) 0 (12,803) 2,799 15,603 10.92
FY17E 22,761 6,189 (796) 0 28,154 (15,972) 0 (15,972) (4,767) 0 (9,657) 0 (14,424) (2,242) 12,182 8.53
FY14 2.1 4.6 21.1 40.2 55.2 32.5 32.0 19.7 2.1
FY15 17.0 28.3 31.0 46.5 60.5 42.6 35.8 19.6 17.0
FY16 15.9 15.1 23.0 47.6 60.1 38.4 38.0 19.7 15.9
FY17E 10.0 12.4 17.5 50.4 61.5 40.6 40.6 20.1 10.0
FY14 0.26 cash
FY15 0.23 cash
FY16 0.21 cash
FY17E 0.17 cash
FY18E 60,549 (29,279) 31,270 0 37,429 (6,159) 31,270 (1,092) 0 1,344 31,522 (6,322) (43) 25,158 17.61 17.61 25,158 17.61 8.78
FY19E 65,908 (31,246) 34,662 0 40,935 (6,273) 34,662 (956) 0 1,113 34,819 (6,983) (47) 27,789 19.45 19.45 27,789 19.45 9.70
FY18E 44,510 283 122,185 19,649 186,627 3,739 19,019 41,099 177 145,351 186,628
FY19E 32,332 308 144,466 19,874 196,980 3,702 15,310 37,563 130 159,286 196,980
FY18E 25,158 6,159 57 0 31,374 (29,833) 0 (29,833) (3,931) 0 (11,347) 0 (15,279) (13,738) 1,541 1.08
FY19E 27,789 6,273 (39) 0 34,022 (29,912) 0 (29,912) (3,746) 0 (12,542) 0 (16,288) (12,178) 4,110 2.88
FY18E 8.0 8.6 10.5 51.6 61.8 41.6 41.6 20.1 8.0
FY19E 8.9 9.4 10.5 52.6 62.1 42.2 42.2 20.1 8.9
FY18E 0.14 cash
FY19E 0.11 cash
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
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, PACE, M‐CHAI, PF. TFD, EVER.
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 UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
