Transport & Logistics (Aviation)
Transport & Logistics (Aviation) Industry Update
Overweight
April 7, 2015
Short‐term turbulence
Share data (Transport & Logistics) SET index
1,536.05
Sector index
225.73
52‐week high
244.71
52‐week low
174.06
Market capitalization (Bt m)
821,487.61
% of market cap
5.70
Avg daily turnover (m shares)
466.01
Beta
1.74
Sector Performance (%)
1M
3M
12M
Absolute
‐2.24
2.96
26.23
Relative
‐1.14
‐0.56
13.35
Note: An executive of KT ZMICO Securities is also a member of PSL’s board.
Raenoo Bhandasukdi Analyst, no 17989 [email protected] 66 (0) 2695‐5836
Maintain Overweight rating despite negative impact from ICAO Although Thai airline operators will be negatively impacted following the ICAO’s safety audit result, we believe the effect on charter flight operations will be insignificant. Meanwhile, we also believe Thai airline operators’ safety standards are sufficient and will be able to pass more stringent inspections by many countries. As such, we maintain our Overweight rating for the sector for long‐term investment. Nevertheless, we remove NOK from our favorite stocks. Two categories of Thai DCA fail safety audit by the ICAO The outcome of the safety audit by the International Civil Aviation Organization (ICAO) of the Thai DCA (Department of Aviation) was that there is not sufficient confidence that Thai DCA meet ICAO standards (Significant Safety Concerns: SSC) with respect to two categories: 1) the process of approval for Aircraft Operations Certification (AOC) and 2) the shipping of dangerous goods. Thai DCA officials proposed corrective action on 2nd March and will have two months (until 30th May) before the ICAO will consider whether to accept or reject the action plans. Short‐term impact to charter flights is insignificant DCA in many countries have announced measures in response to the safety concerns raised by the ICAO; for example, Japan announced that it would ban charter flights from Thai airlines to Japan. Meanwhile, China and South Korea have banned new flights or modified the schedules of Thai carriers. However, the ban from Japan was delay for two months. It is likely that DCA agencies in other countries, especially the Federal Aviation Administration (FAA) from US and the European Aviation Safety Agency (EASA), will take action in response to this problem. However, if the measures focus on charter flights, it will not have much of an impact on airlines as charter flight passenger revenue in 2014 contributed around 3% and 5% of NOK’s and AAV’s total revenue, respectively, while the charter revenue of THAI and BA is insignificant. Meanwhile, according to AAV, it does not operate charter flights currently. SSC impact ‐ intense and frequent inspections for scheduled flights According to THAI, Thai carriers are expected to be subject to more stringent and frequent checks by other DCA countries. South Korea has already increased the frequency of ramp inspection checks from twice per year to eight times per year. Nonetheless, THAI believes that the company’s safety standards are appropriate and its long experience in airline operations will enable it to solve the problem. NOK’s earnings and TP are under review for possible downgrade NOK will receive the most impact from this problem as NOK‐SCOOT is in the process of requesting scheduled flights from Bangkok to South Korea, China and Japan. All of the requests have now been halted. It is expected that it will take around eight months to solve the above problem, according to NOK. Hence, our earnings forecasts in 2015‐16E and target price for NOK are under review for possible downgrades. Our earnings projection for AAV, BA and THAI are maintained.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: Rating and valuation summary AAV AOT* BA BECL BTS** NOK PSL THAI Average
Rating Buy Outperform Buy Outperform Outperform U.R. Buy Outperform
TP (Bt) 7.40 280.00 27.50 44.00 11.30 U.R. 26.00 13.20
14 205.8 34.7 120.8 10.9 48.2 n.m. n.m. n.m. n.m.
PER (x) 15E 15.9 27.7 22.1 10.6 42.9 8.1 85.2 n.m. 30.4
16E 14.0 23.8 18.8 10.1 40.8 6.9 26.4 15.4 19.5
14 1.3 4.3 1.7 1.4 2.0 1.9 0.9 0.6 1.8
PBV (x) 15E 1.2 3.9 1.6 1.3 2.2 1.7 0.9 0.7 1.7
16E 1.1 3.6 1.5 1.2 2.4 1.5 0.9 0.7 1.6
14 0.6 12.8 2.1 14.0 4.1 (11.3) (0.5) (31.8) (1.3)
ROE (%) 15E 7.8 14.8 7.4 12.8 4.9 22.3 1.1 (13.4) 7.2
16E 8.4 15.7 8.3 12.6 5.6 23.4 3.5 4.6 10.3
Div. yield (%) 14 15E 16E ‐ 2.5 2.9 1.2 1.5 1.7 1.0 2.3 2.7 6.4 4.7 5.0 5.7 6.4 6.4 ‐ 6.2 7.2 1.4 1.4 2.7 ‐ ‐ ‐ 2.0 3.1 3.6
Source: KT ZMICO Research Note: *Fiscal year ended September, **Fiscal year ended March
Figure 2: Earnings summary Company AAV AOT* BA BECL BTS** NOK PSL THAI Total
Net profit (Btm) 14 15E 183 1,552 12,220 15,049 351 1,900 3,206 2,854 4,325 2,609 (472) 892 (80) 168 (15,612) (5,174) 4,122 19,850
16E 1,772 17,510 2,229 2,999 2,744 1,046 544 1,705 30,550
Norm. profit (Btm) 14 15E 16E 120 1,552 1,772 12,029 15,049 17,510 348 1,900 2,229 2,776 2,854 2,999 2,321 2,609 2,744 (472) 892 1,046 (76) 168 544 (23,048) (5,174) 1,705 (6,002) 19,850 30,550
Norm. EPS (Bt) 14 15E 16E 0.02 0.32 0.37 8.42 10.53 12.26 0.17 0.90 1.06 3.61 3.71 3.90 0.19 0.22 0.23 (0.75) 1.43 1.67 (0.07) 0.16 0.52 0.78 (10.56) (2.37)
Norm. EPS growth (%) 14 15E 16E (86.8) 1,191.9 14.2 21.1 25.1 16.4 (70.5) 446.4 17.3 2.8 5.1 31.5 7.7 12.4 5.2 (144.2) n.m. 17.3 n.m. n.m. 223.2 292.8 (77.6) n.m.
Source: KT ZMICO Research Note: *Fiscal year ended September, **Fiscal year ended March
Figure 3: Share price performance & relative performance vs. SETTRANS and SET AAV AOT BA BECL BTS NOK PSL THAI
Closed (Bt) 03/04/15 5.10 292.00 20.00 39.25 9.40 11.60 13.80 12.00
1W (8.1) (0.3) (1.5) (1.3) 3.9 (1.7) (3.5) 9.1
Price change (%) 1M 3M (1.9) 18.6 (1.7) 7.0 1.5 2.0 (12.3) 0.6 (1.1) (1.6) (16.5) (10.1) (18.3) 1.5 (8.4) (17.2)
12M 25.0 47.5 18.0 11.9 (38.0) (47.9) (13.7)
1W (8.6) (0.9) (2.0) (1.8) 3.3 (2.2) (4.0) 8.6
Relative to SETTRANS 1M 3M 1.4 15.6 1.7 4.0 4.9 (0.9) (8.9) (2.3) 2.3 (4.5) (13.2) (13.0) (15.0) (1.5) (5.0) (20.2)
12M 1.5 24.0 (5.4) (11.6) (61.5) (71.4) (37.2)
1W (10.8) (3.1) (4.2) (4.0) 1.1 (4.4) (6.2) 6.4
Relative to SET 1M 3M (0.2) 15.0 0.0 3.4 3.2 (2.9) (10.6) 0.7 (5.1) (14.8) (13.6) (16.6) (2.1) (6.7) (20.8)
Source: KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
12M 14.6 37.1 7.6 1.5 (48.4) (58.3) (24.1)
Figure 4: International tourist arrivals by nationality Figure 5: International tourist arrivals growth (% YoY) Persons
3,000,000
No. of Tourist (LHS)
% +/- y-y (RHS)
40% 30%
2,500,000
20% 2,000,000 10% 1,500,000 0% 1,000,000 -10% 500,000
-20%
-
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15
-30%
Source: Department of Tourism (2014),THAI Figure 6: AAV’s PER band and sensitivity of market prices based on PER at difference standard deviation levels 2015E +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD ‐2.5SD
(X) 45 40 35 +1.0 S.D.
30 25
Avg. -0.50S.D.
20
Mar-15
Dec-14
Jul-14
Oct-14
Mar-14
May-14
Dec-13
Oct-13
Aug-13
Jan-13
Mar-13
Oct-12
Aug-12
10
May-12
15
May-13
-1 .0S.D.
PER (x) 32.0 29.0 26.0 23.0 20.0 17.0 14.0 11.0
Implied market price (Bt) 10.24 9.28 8.32 7.36 6.40 5.44 4.48 3.52
Upside/Downside vs. current market price (%) 100.8 82.0 63.1 44.3 25.5 6.7 (12.2) (31.0)
Source: Bloomberg, KT ZMICO Research Figure 7: NOK’s PER band and sensitivity of market prices based on PER at difference standard deviation levels (X)
18 +2.0 S.D.
16
+1.0 S.D.
14 12
Avg.
10
-1.0 S.D. -2.0 S.D.
8
Apr-15
Feb-15
Dec-14
Nov-14
Sep-14
Jul-14
Jun-14
Apr-14
Feb-14
Jan-14
Nov-13
Sep-13
Jun-13
Aug-13
6
2015E +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD ‐2.5SD
PER (x) 14.9 13.8 12.6 11.5 10.3 9.2 8.0 6.9
Implied market price (Bt) 21.31 19.66 18.02 16.37 14.73 13.08 11.44 9.80
Upside/Downside vs. current market price (%) 83.7 69.5 55.3 41.2 27.0 12.8 (1.4) (15.6)
Source: Bloomberg, KT ZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Figure 8: THAI’s P/BV band and sensitivity of market prices based on PER at difference standard deviation levels (X)
2015E +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD
2.8 2.5 2.3 2.0 1.8
+1.0 S.D.
1.5 1.3
Avg.
1.0 0.8 0.5
Jul-14
Mar-15
Apr-13
Nov-13
Dec-11
Aug-12
May-11
Jan-10
Sep-10
Oct-08
May-09
Jun-07
Feb-08
Nov-06
Jul-05
Mar-06
Apr-04
Jan-03
Aug-03
0.0
Dec-04
-1.0 S.D.
0.3
P/BV (x) 1.4 1.2 1.0 0.8 0.6 0.4 0.2
Implied market price (Bt) 25.75 21.58 17.40 13.22 9.05 4.87 0.70
Upside/Downside vs. current market price (%) 114.6 79.8 45.0 10.2 (24.6) (59.4) (94.2)
Source: Bloomberg, KT ZMICO Research Figure 9: Peer comparison COUNTRY
15‐16E
PER (x) 15E
PBV (x) 16E
14E
15E
Yield (%) 16E
14E
15E
ROE (%) 16E
14E
15E
EV/EBITDA (x)
CAGR 14E
16E
14E
15E
16E
Malaysia
230.2
90.7
7.7
7.0
1.7
1.1
1.0
0.0
2.6
3.0
1.7
14.5
14.9
12.4
8.9
8.4
12.8
12.5
9.9
9.2
1.4
1.2
1.2
6.0
6.5
7.3
10.4
13.2
13.6
10.9
7.6
7.0
LCC AIR ASIA BHD AIRARABI
UAE
CEBU AIR INC
Philippines
166.7
60.9
9.1
8.5
2.4
2.0
1.6
1.2
2.0
1.9
4.0
23.1
21.6
9.7
6.4
6.2
EASYJET PLC
Britain
14.5
12.4
13.7
12.3
2.6
2.9
2.6
3.2
3.4
3.3
21.5
22.3
21.5
7.5
8.5
7.9
RYANAIR HOLDINGS PLC
Ireland
36.8
20.6
17.6
15.7
3.2
4.1
3.4
0.0
2.8
0.5
15.9
24.3
23.6
10.3
10.2
9.3
SOUTHWEST AIRLINES
USA
36.5
21.0
12.2
11.4
4.2
3.1
2.6
0.5
0.7
0.8
16.1
29.7
24.9
8.9
5.8
5.4
TIGER AIRWAYS HLDG
Singapore
n.a.
n.a.
n.a.
86.3
6.6
3.7
3.5
0.0
0.0
0.0
n.m.
n.m.
n.m.
n.a.
n.a.
15.0
Australia
n.a.
n.a.
n.a.
17.2
1.4
1.7
1.6
0.0
0.0
0.2
n.m.
(5.5)
9.5
81.7
10.9
6.3
Canada
17.8
13.6
8.7
8.7
2.4
1.8
1.6
1.4
1.8
2.2
16.9
21.9
17.2
5.8
3.8
3.7
73.6
33.1
11.2
19.6
2.9
2.4
2.1
1.4
2.2
2.1
6.7
17.9
18.3
18.4
7.8
7.7
Conventional CHINA SOUTHERN AIRLINES‐H China
68.8
16.4
10.2
9.6
0.8
1.2
1.1
1.4
1.5
1.9
5.1
12.6
11.9
9.7
8.4
7.9
AIR CHINA LTD‐H
China
44.8
16.2
12.3
10.7
1.2
1.4
1.3
1.0
1.5
1.6
7.0
12.5
11.9
9.6
9.1
8.7
CATHAY PACIFIC AIRWAYS
Hong Kong
54.1
21.1
11.1
9.8
1.3
1.2
1.1
2.1
3.3
3.8
5.5
12.1
12.3
8.2
6.3
5.9
CHINA EASTERN AIRLINES‐H
China
35.8
11.0
9.9
8.3
1.4
1.5
1.3
0.0
0.4
0.5
12.5
17.2
17.4
11.7
9.5
8.8
KOREAN AIR LINES CO LTD
South Korea
n.a.
n.a.
9.2
10.8
1.3
1.3
1.2
0.0
0.0
0.0
(20.3)
15.3
11.9
9.2
7.5
7.5
SINGAPORE AIRLINES LTD
Singapore
50.8
34.2
35.8
17.2
0.9
1.1
1.0
2.0
2.0
3.6
2.7
3.1
6.0
4.4
5.4
4.2
EVA AIRWAYS CORP
Taiwan
n.a.
n.a.
10.7
12.0
2.1
1.7
1.6
n.a.
0.4
0.0
(3.7)
17.2
12.0
9.3
6.3
6.6
CHINA AIRLINES LTD
Taiwan
VIRGIN AUSTRALIA HLDG WESTJET AIRLINES LTD Average (simple)
Average (simple)
n.a.
n.a.
9.1
9.8
1.6
1.4
1.3
n.a.
1.2
0.6
(1.5)
15.7
11.9
9.3
5.9
6.2
50.9
19.8
13.5
11.0
1.3
1.4
1.2
1.1
1.3
1.5
0.9
13.2
11.9
8.9
7.3
7.0
Source: Bloomberg
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
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 return over six months period because of specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to below market return over six months period because of 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 5 of 5
th
th
th
th
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.
Overweight
April 7, 2015
Short‐term turbulence
Share data (Transport & Logistics) SET index
1,536.05
Sector index
225.73
52‐week high
244.71
52‐week low
174.06
Market capitalization (Bt m)
821,487.61
% of market cap
5.70
Avg daily turnover (m shares)
466.01
Beta
1.74
Sector Performance (%)
1M
3M
12M
Absolute
‐2.24
2.96
26.23
Relative
‐1.14
‐0.56
13.35
Note: An executive of KT ZMICO Securities is also a member of PSL’s board.
Raenoo Bhandasukdi Analyst, no 17989 [email protected] 66 (0) 2695‐5836
Maintain Overweight rating despite negative impact from ICAO Although Thai airline operators will be negatively impacted following the ICAO’s safety audit result, we believe the effect on charter flight operations will be insignificant. Meanwhile, we also believe Thai airline operators’ safety standards are sufficient and will be able to pass more stringent inspections by many countries. As such, we maintain our Overweight rating for the sector for long‐term investment. Nevertheless, we remove NOK from our favorite stocks. Two categories of Thai DCA fail safety audit by the ICAO The outcome of the safety audit by the International Civil Aviation Organization (ICAO) of the Thai DCA (Department of Aviation) was that there is not sufficient confidence that Thai DCA meet ICAO standards (Significant Safety Concerns: SSC) with respect to two categories: 1) the process of approval for Aircraft Operations Certification (AOC) and 2) the shipping of dangerous goods. Thai DCA officials proposed corrective action on 2nd March and will have two months (until 30th May) before the ICAO will consider whether to accept or reject the action plans. Short‐term impact to charter flights is insignificant DCA in many countries have announced measures in response to the safety concerns raised by the ICAO; for example, Japan announced that it would ban charter flights from Thai airlines to Japan. Meanwhile, China and South Korea have banned new flights or modified the schedules of Thai carriers. However, the ban from Japan was delay for two months. It is likely that DCA agencies in other countries, especially the Federal Aviation Administration (FAA) from US and the European Aviation Safety Agency (EASA), will take action in response to this problem. However, if the measures focus on charter flights, it will not have much of an impact on airlines as charter flight passenger revenue in 2014 contributed around 3% and 5% of NOK’s and AAV’s total revenue, respectively, while the charter revenue of THAI and BA is insignificant. Meanwhile, according to AAV, it does not operate charter flights currently. SSC impact ‐ intense and frequent inspections for scheduled flights According to THAI, Thai carriers are expected to be subject to more stringent and frequent checks by other DCA countries. South Korea has already increased the frequency of ramp inspection checks from twice per year to eight times per year. Nonetheless, THAI believes that the company’s safety standards are appropriate and its long experience in airline operations will enable it to solve the problem. NOK’s earnings and TP are under review for possible downgrade NOK will receive the most impact from this problem as NOK‐SCOOT is in the process of requesting scheduled flights from Bangkok to South Korea, China and Japan. All of the requests have now been halted. It is expected that it will take around eight months to solve the above problem, according to NOK. Hence, our earnings forecasts in 2015‐16E and target price for NOK are under review for possible downgrades. Our earnings projection for AAV, BA and THAI are maintained.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: Rating and valuation summary AAV AOT* BA BECL BTS** NOK PSL THAI Average
Rating Buy Outperform Buy Outperform Outperform U.R. Buy Outperform
TP (Bt) 7.40 280.00 27.50 44.00 11.30 U.R. 26.00 13.20
14 205.8 34.7 120.8 10.9 48.2 n.m. n.m. n.m. n.m.
PER (x) 15E 15.9 27.7 22.1 10.6 42.9 8.1 85.2 n.m. 30.4
16E 14.0 23.8 18.8 10.1 40.8 6.9 26.4 15.4 19.5
14 1.3 4.3 1.7 1.4 2.0 1.9 0.9 0.6 1.8
PBV (x) 15E 1.2 3.9 1.6 1.3 2.2 1.7 0.9 0.7 1.7
16E 1.1 3.6 1.5 1.2 2.4 1.5 0.9 0.7 1.6
14 0.6 12.8 2.1 14.0 4.1 (11.3) (0.5) (31.8) (1.3)
ROE (%) 15E 7.8 14.8 7.4 12.8 4.9 22.3 1.1 (13.4) 7.2
16E 8.4 15.7 8.3 12.6 5.6 23.4 3.5 4.6 10.3
Div. yield (%) 14 15E 16E ‐ 2.5 2.9 1.2 1.5 1.7 1.0 2.3 2.7 6.4 4.7 5.0 5.7 6.4 6.4 ‐ 6.2 7.2 1.4 1.4 2.7 ‐ ‐ ‐ 2.0 3.1 3.6
Source: KT ZMICO Research Note: *Fiscal year ended September, **Fiscal year ended March
Figure 2: Earnings summary Company AAV AOT* BA BECL BTS** NOK PSL THAI Total
Net profit (Btm) 14 15E 183 1,552 12,220 15,049 351 1,900 3,206 2,854 4,325 2,609 (472) 892 (80) 168 (15,612) (5,174) 4,122 19,850
16E 1,772 17,510 2,229 2,999 2,744 1,046 544 1,705 30,550
Norm. profit (Btm) 14 15E 16E 120 1,552 1,772 12,029 15,049 17,510 348 1,900 2,229 2,776 2,854 2,999 2,321 2,609 2,744 (472) 892 1,046 (76) 168 544 (23,048) (5,174) 1,705 (6,002) 19,850 30,550
Norm. EPS (Bt) 14 15E 16E 0.02 0.32 0.37 8.42 10.53 12.26 0.17 0.90 1.06 3.61 3.71 3.90 0.19 0.22 0.23 (0.75) 1.43 1.67 (0.07) 0.16 0.52 0.78 (10.56) (2.37)
Norm. EPS growth (%) 14 15E 16E (86.8) 1,191.9 14.2 21.1 25.1 16.4 (70.5) 446.4 17.3 2.8 5.1 31.5 7.7 12.4 5.2 (144.2) n.m. 17.3 n.m. n.m. 223.2 292.8 (77.6) n.m.
Source: KT ZMICO Research Note: *Fiscal year ended September, **Fiscal year ended March
Figure 3: Share price performance & relative performance vs. SETTRANS and SET AAV AOT BA BECL BTS NOK PSL THAI
Closed (Bt) 03/04/15 5.10 292.00 20.00 39.25 9.40 11.60 13.80 12.00
1W (8.1) (0.3) (1.5) (1.3) 3.9 (1.7) (3.5) 9.1
Price change (%) 1M 3M (1.9) 18.6 (1.7) 7.0 1.5 2.0 (12.3) 0.6 (1.1) (1.6) (16.5) (10.1) (18.3) 1.5 (8.4) (17.2)
12M 25.0 47.5 18.0 11.9 (38.0) (47.9) (13.7)
1W (8.6) (0.9) (2.0) (1.8) 3.3 (2.2) (4.0) 8.6
Relative to SETTRANS 1M 3M 1.4 15.6 1.7 4.0 4.9 (0.9) (8.9) (2.3) 2.3 (4.5) (13.2) (13.0) (15.0) (1.5) (5.0) (20.2)
12M 1.5 24.0 (5.4) (11.6) (61.5) (71.4) (37.2)
1W (10.8) (3.1) (4.2) (4.0) 1.1 (4.4) (6.2) 6.4
Relative to SET 1M 3M (0.2) 15.0 0.0 3.4 3.2 (2.9) (10.6) 0.7 (5.1) (14.8) (13.6) (16.6) (2.1) (6.7) (20.8)
Source: KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
12M 14.6 37.1 7.6 1.5 (48.4) (58.3) (24.1)
Figure 4: International tourist arrivals by nationality Figure 5: International tourist arrivals growth (% YoY) Persons
3,000,000
No. of Tourist (LHS)
% +/- y-y (RHS)
40% 30%
2,500,000
20% 2,000,000 10% 1,500,000 0% 1,000,000 -10% 500,000
-20%
-
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15
-30%
Source: Department of Tourism (2014),THAI Figure 6: AAV’s PER band and sensitivity of market prices based on PER at difference standard deviation levels 2015E +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD ‐2.5SD
(X) 45 40 35 +1.0 S.D.
30 25
Avg. -0.50S.D.
20
Mar-15
Dec-14
Jul-14
Oct-14
Mar-14
May-14
Dec-13
Oct-13
Aug-13
Jan-13
Mar-13
Oct-12
Aug-12
10
May-12
15
May-13
-1 .0S.D.
PER (x) 32.0 29.0 26.0 23.0 20.0 17.0 14.0 11.0
Implied market price (Bt) 10.24 9.28 8.32 7.36 6.40 5.44 4.48 3.52
Upside/Downside vs. current market price (%) 100.8 82.0 63.1 44.3 25.5 6.7 (12.2) (31.0)
Source: Bloomberg, KT ZMICO Research Figure 7: NOK’s PER band and sensitivity of market prices based on PER at difference standard deviation levels (X)
18 +2.0 S.D.
16
+1.0 S.D.
14 12
Avg.
10
-1.0 S.D. -2.0 S.D.
8
Apr-15
Feb-15
Dec-14
Nov-14
Sep-14
Jul-14
Jun-14
Apr-14
Feb-14
Jan-14
Nov-13
Sep-13
Jun-13
Aug-13
6
2015E +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD ‐2.5SD
PER (x) 14.9 13.8 12.6 11.5 10.3 9.2 8.0 6.9
Implied market price (Bt) 21.31 19.66 18.02 16.37 14.73 13.08 11.44 9.80
Upside/Downside vs. current market price (%) 83.7 69.5 55.3 41.2 27.0 12.8 (1.4) (15.6)
Source: Bloomberg, KT ZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Figure 8: THAI’s P/BV band and sensitivity of market prices based on PER at difference standard deviation levels (X)
2015E +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD
2.8 2.5 2.3 2.0 1.8
+1.0 S.D.
1.5 1.3
Avg.
1.0 0.8 0.5
Jul-14
Mar-15
Apr-13
Nov-13
Dec-11
Aug-12
May-11
Jan-10
Sep-10
Oct-08
May-09
Jun-07
Feb-08
Nov-06
Jul-05
Mar-06
Apr-04
Jan-03
Aug-03
0.0
Dec-04
-1.0 S.D.
0.3
P/BV (x) 1.4 1.2 1.0 0.8 0.6 0.4 0.2
Implied market price (Bt) 25.75 21.58 17.40 13.22 9.05 4.87 0.70
Upside/Downside vs. current market price (%) 114.6 79.8 45.0 10.2 (24.6) (59.4) (94.2)
Source: Bloomberg, KT ZMICO Research Figure 9: Peer comparison COUNTRY
15‐16E
PER (x) 15E
PBV (x) 16E
14E
15E
Yield (%) 16E
14E
15E
ROE (%) 16E
14E
15E
EV/EBITDA (x)
CAGR 14E
16E
14E
15E
16E
Malaysia
230.2
90.7
7.7
7.0
1.7
1.1
1.0
0.0
2.6
3.0
1.7
14.5
14.9
12.4
8.9
8.4
12.8
12.5
9.9
9.2
1.4
1.2
1.2
6.0
6.5
7.3
10.4
13.2
13.6
10.9
7.6
7.0
LCC AIR ASIA BHD AIRARABI
UAE
CEBU AIR INC
Philippines
166.7
60.9
9.1
8.5
2.4
2.0
1.6
1.2
2.0
1.9
4.0
23.1
21.6
9.7
6.4
6.2
EASYJET PLC
Britain
14.5
12.4
13.7
12.3
2.6
2.9
2.6
3.2
3.4
3.3
21.5
22.3
21.5
7.5
8.5
7.9
RYANAIR HOLDINGS PLC
Ireland
36.8
20.6
17.6
15.7
3.2
4.1
3.4
0.0
2.8
0.5
15.9
24.3
23.6
10.3
10.2
9.3
SOUTHWEST AIRLINES
USA
36.5
21.0
12.2
11.4
4.2
3.1
2.6
0.5
0.7
0.8
16.1
29.7
24.9
8.9
5.8
5.4
TIGER AIRWAYS HLDG
Singapore
n.a.
n.a.
n.a.
86.3
6.6
3.7
3.5
0.0
0.0
0.0
n.m.
n.m.
n.m.
n.a.
n.a.
15.0
Australia
n.a.
n.a.
n.a.
17.2
1.4
1.7
1.6
0.0
0.0
0.2
n.m.
(5.5)
9.5
81.7
10.9
6.3
Canada
17.8
13.6
8.7
8.7
2.4
1.8
1.6
1.4
1.8
2.2
16.9
21.9
17.2
5.8
3.8
3.7
73.6
33.1
11.2
19.6
2.9
2.4
2.1
1.4
2.2
2.1
6.7
17.9
18.3
18.4
7.8
7.7
Conventional CHINA SOUTHERN AIRLINES‐H China
68.8
16.4
10.2
9.6
0.8
1.2
1.1
1.4
1.5
1.9
5.1
12.6
11.9
9.7
8.4
7.9
AIR CHINA LTD‐H
China
44.8
16.2
12.3
10.7
1.2
1.4
1.3
1.0
1.5
1.6
7.0
12.5
11.9
9.6
9.1
8.7
CATHAY PACIFIC AIRWAYS
Hong Kong
54.1
21.1
11.1
9.8
1.3
1.2
1.1
2.1
3.3
3.8
5.5
12.1
12.3
8.2
6.3
5.9
CHINA EASTERN AIRLINES‐H
China
35.8
11.0
9.9
8.3
1.4
1.5
1.3
0.0
0.4
0.5
12.5
17.2
17.4
11.7
9.5
8.8
KOREAN AIR LINES CO LTD
South Korea
n.a.
n.a.
9.2
10.8
1.3
1.3
1.2
0.0
0.0
0.0
(20.3)
15.3
11.9
9.2
7.5
7.5
SINGAPORE AIRLINES LTD
Singapore
50.8
34.2
35.8
17.2
0.9
1.1
1.0
2.0
2.0
3.6
2.7
3.1
6.0
4.4
5.4
4.2
EVA AIRWAYS CORP
Taiwan
n.a.
n.a.
10.7
12.0
2.1
1.7
1.6
n.a.
0.4
0.0
(3.7)
17.2
12.0
9.3
6.3
6.6
CHINA AIRLINES LTD
Taiwan
VIRGIN AUSTRALIA HLDG WESTJET AIRLINES LTD Average (simple)
Average (simple)
n.a.
n.a.
9.1
9.8
1.6
1.4
1.3
n.a.
1.2
0.6
(1.5)
15.7
11.9
9.3
5.9
6.2
50.9
19.8
13.5
11.0
1.3
1.4
1.2
1.1
1.3
1.5
0.9
13.2
11.9
8.9
7.3
7.0
Source: Bloomberg
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
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 return over six months period because of specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to below market return over six months period because of 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 5 of 5
th
th
th
th
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.
