Transport & Logistics
Transport & Logistics Industry Update
Overweight
23 December 2014
November Statistics
Share data (Transport & Logistics) SET index
1,536.83
Sector index
226.94
52‐week high
234.42
52‐week low
148.23
Market capitalization (Bt m)
819,016.43
% of market cap
5.77
Avg daily turnover (m shares)
387.16
Beta
1.19
Sector Performance (%)
1M
3M
12M
Absolute
2.59
4.61
40.12
Relative
6.14
8.23
18.41
Raenoo Bhandasukdi Analyst, no 17989 [email protected] 66 (0) 2695‐5836
Maintain “Overweight” rating We change our recommendations for AOT, BTS and THAI to Outperform, vs. Trading BUY previously, assigning a new rating introduced by KT ZMICO Research to our transport sector coverage. We still recommend “overweight” for the sector as we believe earnings in 2015E will turn around, especially the aviation sector. We select LCCs (NOK & AAV) for the top picks in the aviation sector, while BTS is the top pick for dividend lovers. AOT’s passenger volume expanded 10.7% in Nov‐14 AOT reported passenger volume of 8.4mn in Nov‐14, increasing by 10.7% YoY, consisting of domestic passengers of 3.4mn (+19.9% YoY) and international passengers of 4.9mn (+5.1% YoY). For 2MFY15 (Oct – Nov 14), AOT’s passengers increased by 11% YoY, vs. our assumption of +16% YoY for the whole year. Meanwhile, its aircraft volume expanded by 9% YoY, vs. our assumption of +12% for the whole year. We maintain our projection. LCC passenger volume growth outpaced flight volume expansion Total LCC passenger volume growth at AOT’s six airports of +32% YoY in Nov‐14 still outpaced LCC’s flight volume growth of +30% YoY. As a result, we still believe that LCC’s airfare pressure will continue to be relieved. We maintain our view that airlines’ performance will improve QoQ in 4Q14E, especially AAV, which will likely benefit from international passenger volume improvement. We do not expect airlines’ earnings in 4Q14E to receive much of a positive impact from the lower global jet fuel price currently owing to the hedging positions. Unfavorable BTS statistics from high base BTS posted ridership growth of +1.6% YoY to 623,800 trips/day in Nov‐ 14, vs. +4.4% YoY in Oct‐14. We believe this could be the result of a high base from the same period last year (Nov‐13) when BTS gained extra ridership from the political protests on Bangkok’s streets. For 8MFY15 (Apr 14 – Nov 14), BTS’s ridership grew by 2.3% YoY, vs. our forecast of +5% YoY for the whole year (end Mar‐15). Accelerating motorist volume growth for BECL BECL’s traffic volume increased by 4.5% YoY to 1.17mn vehicles in Nov‐ 14, accelerating compared to +3.2% YoY in Oct‐14, especially the urban sector. We expect BECL’s traffic volume to have benefited from the lower domestic benzene fuel price. For 11M14, BECL’s traffic volume still declined slightly by ‐0.4% YoY, vs. our forecast of +0.0% YoY for the whole year.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
Maintain “Overweight” rating We change our recommendations for AOT, BTS and THAI to Outperform, vs. Trading BUY previously, assigning a new rating introduced by KT ZMICO Research to our transport sector coverage. The rating for the rest of stocks is maintained. We still recommend “overweight” for the sector as we believe earnings in 2015E will turn around, especially for the aviation sector, thanks to passenger volume growth after being pressured by the political conflict in 1H14, as well as the lower global jet fuel price. We select LCCs (NOK and AAV) for the top picks in the aviation sector, while BTS is the top pick for dividend lovers. Figure 1: Rating and valuation summary Rating AAV
Buy
AOT*
Outperform
TP
PER (x)
PBV (x)
ROE (%)
Div. yield (%)
(Bt)
13
14E
15E
13
14E
15E
13
14E
15E
13
14E
6.70
24.2
343.4
18.5
1.1
1.1
1.1
4.9
0.3
6.0
-
-
15E 2.2
280.00
41.0
33.8
27.1
4.4
4.2
3.8
11.7
12.8
14.8
1.6
1.2
1.5
BA
Buy
27.50
37.9
155.6
23.5
4.8
2.2
2.1
12.2
2.1
9.2
3.6
0.3
2.1
BECL
Buy
45.00
16.4
10.9
10.3
1.6
1.5
1.4
9.2
14.5
14.2
4.2
4.3
4.6
BTS**
Outperform
11.30
54.2
45.3
44.8
2.0
2.2
2.4
4.0
4.6
5.2
6.1
7.0
6.2
NOK
Buy
18.90
7.9
n.m.
10.7
1.8
1.9
1.8
39.3
(9.7)
17.4
7.7
-
4.7
PSL
Buy
26.00
(35.8)
735.5
89.6
1.0
1.0
1.0
(2.8)
0.1
1.1
2.8
1.4
1.4
THAI
Outperform
18.00
(5.6)
n.m.
27.4
0.6
0.7
0.7
(19.2)
(15.1)
2.4
-
-
-
17.5
n.m.
31.5
2.2
1.9
1.8
7.4
1.2
8.8
3.3
1.8
2.8
Average
Source: KT ZMICO Research Note: *Fiscal year ended September, **Fiscal year ended March
Figure 2: Earnings summary Company AAV AOT* BA BECL
Net profit (Btm)
Norm. profit (Btm)
Norm. EPS (Bt)
Norm. EPS growth (%)
13
14E
15E
13
14E
15E
13
14E
15E
13
14E
15E
1,043
118
1,198
914
64
1,198
0.19
0.01
0.25
13.7
(93.0)
1,760.1
16,347
12,220
15,048
9,935
12,029
15,048
6.95
8.42
10.53
51.7
21.1
25.1
932
291
1,900
888
287
1,900
0.56
0.14
0.90
(6.1)
(75.6)
561.2
4,835
2,750
2,855
1,800
2,708
2,855
2.34
3.52
3.71
20.9
50.4
5.5
12,645
2,981
2,609
2,155
2,577
2,609
0.18
0.22
0.22
118.6
19.6
1.2
1,066
(430)
786
1,066
(430)
786
1.71
(0.69)
1.26
68.8
(140.3)
n.m.
528
11
168
(421)
20
168
(0.40)
0.02
0.16
165.1
n.m.
720.5
THAI
(12,047)
(7,965)
1,203
(5,868)
(16,049)
1,203
(2.69)
(7.35)
0.55
(964.0)
173.5
n.m.
Total
25,349
9,976
25,768
10,469
1,207
25,768
BTS** NOK PSL
Source: KT ZMICO Research Note: *Fiscal year ended September, **Fiscal year ended March
Figure 3: Share price performance & relative performance vs. SETTRANS and SET Closed (Bt)
Price change (%)
Relative to SETTRANS
Relative to SET
22/12/14
1W
1M
3M
12M
1W
1M
3M
12M
1W
1M
3M
12M
AAV
4.56
(2.1)
8.1
(0.4)
8.1
(4.8)
5.1
(9.3)
(24.6)
(6.1)
10.7
0.9
(6.4)
AOT
25.0
65.2
16.2
32.5
(2.2)
10.6
26.3
50.8
(3.9)
7.6
285.00
1.8
8.0
BA
21.30
-
4.9
BECL
(0.9)
5.0
(2.7)
2.0
38.25
3.4
(2.5)
-
11.7
0.7
(5.5)
(8.8)
(21.0)
(0.6)
0.1
1.3
(2.8)
BTS
9.80
3.2
(3.9)
3.2
10.7
0.5
(6.8)
(5.7)
(22.0)
(0.8)
(1.2)
4.5
(3.7)
NOK
13.40
-
13.6
(17.8)
(36.2)
(2.7)
10.6
(26.6)
(68.9)
(3.9)
16.2
(16.5)
(50.6)
PSL
14.50
6.6
(24.9)
(43.1)
(32.2)
3.9
(27.8)
(52.0)
(64.9)
2.7
(22.2)
(41.8)
(46.7)
THAI
15.10
4.1
1.3
(3.2)
2.0
1.5
(1.6)
(12.0)
(30.7)
0.2
4.0
(1.9)
(12.4)
Source: KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 6
Tourist arrival improvement continued in Nov‐14 The Department of Tourism reported tourist arrivals of 2.4mn in Nov‐14, increasing by 2.5% YoY, the second month of positive growth after falling sharply since early this year from political tension. However, the growth figure decelerated compared to +6.1% YoY in Oct‐14 due to the continuation of martial law, in our view. In Nov‐14, East Asian tourists continued to increase by +10.8%, followed by South Asia (+3.3%). Meanwhile, tourist numbers from Europe still declined by 9.5% and Middle Eastern tourists fell by 3.2%. Nevertheless, we believe overall tourist numbers will continue to improve for the next couple months due to the traditional high season and a low base. AOT’s passenger volume expanded 10.7% in Nov‐14, led by domestic volume AOT reported passenger volume of 8.4mn in Nov‐14, increasing by 10.7% YoY, consisting of domestic passengers of 3.4mn (+19.9% YoY) and international passengers of 4.9mn (+5.1% YoY). Passenger volume from LCC still supported AOT’s passenger volume growth as indicated by the growth figure of Don Muang International Airport (DMK) at +48.8% YoY in Nov‐14. For 2MFY15 (Oct – Nov 14), AOT’s passengers increased by 11% YoY, vs. our assumption of +16% YoY for the whole year. Meanwhile, its aircraft volume expanded by 9% YoY, vs. our assumption of +12% for the whole year. We maintain our projections, as we believe the growth figure will accelerate for the next couple months. LCC passenger volume growth still outpaced flight volume expansion Total LCC passenger volume growth at AOT’s six airports of +32% YoY in Nov‐14 still outpaced LCC’s flight volume growth of +30% YoY. As a result, we still believe that LCC’s airfare pressure will continue to be relieved. International LCC passenger volume expanded significantly by +20% in Nov‐14, while domestic passenger volume increased by 39% YoY. We maintain our view that airlines’ performance will improve QoQ in 4Q14E, especially AAV, which will likely benefit from the improvement of international passengers. However, we expect NOK to continue report a net loss in 4Q14E. We do not expect airlines’ earnings in 4Q14E to receive much of a positive impact from the lower global jet fuel price currently owing to the hedging positions. Figure 4: International tourist arrivals by month
Figure 5: AOT’s LCC passenger & flight volume growth
Source: Department of Tourism, AOT
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 6
Figure 6: Passenger volume growth trend (%YoY) for AOT’s six airports SBIA
DMK
HKT
CNX
HDY
CEI
Total
LCC
(0.1)
24.8
9.6
19.5
18.4
11.5
7.3
26.8
Jan-14
(2.6)
20.5
11.8
22.2
7.4
20.9
5.5
21.0
Feb-14
(10.1)
14.3
4.5
16.9
2.9
23.6
(1.4)
15.6
Mar-14
(14.0)
18.6
1.6
15.3
12.2
22.6
(3.1)
19.0
Apr-14
(8.8)
27.5
7.9
25.7
22.8
40.3
3.7
27.8
May-14
(14.3)
25.3
0.2
16.7
20.5
29.5
(1.4)
24.9
Jun-14
(24.6)
18.0
(12.6)
17.6
29.4
21.9
(10.7)
16.5
Jul-14
(15.6)
25.4
(9.7)
21.1
36.4
30.3
(3.0)
22.2
Aug-14
(10.7)
29.4
(6.8)
21.9
34.6
33.4
1.0
23.3
Sep-14
(15.6)
35.6
(8.9)
16.0
19.0
15.5
(1.8)
25.5
Oct-14
(4.5)
51.7
1.9
28.4
32.7
34.7
11.2
37.6
Nov-14
(2.9)
48.8
3.2
25.0
28.9
19.6
10.7
32.3
Dec-13
Source: AOT
Figure 7: Aircraft movement growth trend (%YoY) for AOT’s six airports SBIA
DMK
HKT
CNX
HDY
CEI
Total
LCC
Dec-13
14.2
23.7
11.3
23.7
12.0
22.4
16.9
32.4
Jan-14
11.9
25.7
12.2
29.4
9.7
39.0
17.0
31.4
Feb-14
3.7
17.6
4.4
23.1
4.2
51.7
9.3
26.8
Mar-14
1.5
19.7
7.4
21.7
13.1
58.1
9.4
27.9
Apr-14
1.1
22.6
12.2
19.3
39.9
71.7
11.1
34.5
May-14
(2.6)
18.7
6.8
18.8
41.0
95.9
7.8
34.0
Jun-14
(9.3)
8.3
(1.0)
13.7
33.1
50.3
(0.3)
19.4
Jul-14
(9.0)
11.1
(5.2)
16.5
31.2
47.9
(0.0)
18.1
Aug-14
(8.8)
14.2
(4.0)
17.2
40.5
48.3
1.3
19.5
Sep-14
(7.6)
14.8
(0.5)
21.7
24.7
53.4
2.6
19.9
Oct-14
(4.4)
25.6
5.4
24.2
34.2
54.5
8.6
31.8
Nov-14
(4.8)
29.5
8.9
31.0
24.6
34.4
9.6
30.0
Notes: SBIA = Suvarnabhumi International Airport DMK = Don Muang International Airport HKT = Phuket International Airport CNX = Chiang Mai International Airport HDY = Had Yai International Airport CEI = Mae Fah Luang - Chiang Rai International Airport LCC = Low Cost Carriers
Source: AOT
Unfavorable BTS statistics from high base BTS posted ridership growth of +1.6% YoY to 623,800 trips/day in Nov‐14, vs. +4.4% YoY in Oct‐14. We believe this could be due to the high base from the same period last year (Nov‐13) when BTS gained extra ridership from the political protests on Bangkok’s streets. For 8MFY15 (Apr 14 – Nov 14), BTS’s ridership grew by 2.3% YoY, vs. our forecast of +5% YoY for the whole year (end Mar‐15). This could create downside risk to BTSGIF’s bottom line but it should not have much of an impact on BTS (33% holding in BTSGIF).
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 6
Figure 8: BTS’s ridership trend update Total
Weekday
Ridership (‘000 trip)
Ridership/ day (trip)
% YoY
Ridership (trip)
Ridership/ day (trip)
Dec-13
17,289
557,719
4.5
11,486
638,103
3.4
Jan-14
19,862
640,731
17.1
15,591
708,668
17.9
Feb-14
18,691
667,550
20.1
13,924
732,824
17.6
Mar-14
18,530
597,743
(0.3)
13,882
661,026
(0.4)
% YoY
Apr-14
16,747
558,232
4.1
12,008
667,109
4.1
May-14
17,249
556,432
1.4
12,287
646,702
3.3
Jun-14
17,282
576,081
0.7
13,380
673,145
6.8
Jul-14
18,136
585,036
2.7
14,241
647,297
2.9
Aug-14
18,407
593,786
(1.1)
12,990
683,691
2.3
Sep-14
18,099
603,301
4.9
14,520
660,012
3.9
Oct-14
18,939
610,951
4.4
14,804
672,952
4.2
Nov-14
18,714
623,800
1.6
13,716
685,808
2.7
Source: BTS
Accelerating motorist volume growth for BECL BECL’s traffic volume increased by 4.5% YoY to 1.17mn vehicles in Nov‐14, accelerating compared to +3.2% YoY in Oct‐14, especially the urban sector. We expect BECL’s traffic volume to have benefited from the lower domestic benzene fuel price following the drop of global oil prices coupled with the change in the energy policy by the NCPO. For 11M14, BECL’s traffic volume still declined slightly by ‐0.4% YoY, vs. our forecast of +0.0% YoY for the whole year. Figure 9: BECL’s traffic volume growth trend (% YoY)
Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14
FES (4.5) (9.1) (7.1) (5.6) (0.3) (4.4) (2.4) (1.0) (1.3) 2.7 2.3 2.8
SectorA (6.2) (6.4) (2.7) (3.6) (0.9) (3.9) (2.5) (0.6) (1.1) 2.4 1.5 3.1
SectorB (10.6) (6.3) 1.2 (7.7) (5.7) (7.8) (2.9) (3.3) (4.1) 0.9 0.8 5.9
Urban (7.6) (6.3) (1.5) (5.0) (2.4) (5.1) (2.6) (1.5) (2.0) 1.9 1.3 4.0
SectorC (3.3) (0.3) 3.2 3.0 4.4 2.4 1.5 2.3 2.4 4.9 4.6 4.9
SectorD (5.1) (7.5) (4.7) (2.7) 0.8 (1.3) (0.2) 2.0 2.0 6.8 7.4 8.9
Total BECL (5.4) (6.5) (3.2) (3.5) 0.0 (3.0) (1.5) (0.1) (0.4) 3.5 3.2 4.5
NECL (3.8) 3.3 5.8 4.5 3.9 4.4 (2.6) (1.8) 3.1 2.7 3.7 4.1
Source: BECL
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 6
BECL+NECL (5.3) (5.9) (2.7) (3.0) 0.2 (2.5) (1.5) (0.2) (0.2) 3.4 3.2 4.5
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 6 of 6
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
23 December 2014
November Statistics
Share data (Transport & Logistics) SET index
1,536.83
Sector index
226.94
52‐week high
234.42
52‐week low
148.23
Market capitalization (Bt m)
819,016.43
% of market cap
5.77
Avg daily turnover (m shares)
387.16
Beta
1.19
Sector Performance (%)
1M
3M
12M
Absolute
2.59
4.61
40.12
Relative
6.14
8.23
18.41
Raenoo Bhandasukdi Analyst, no 17989 [email protected] 66 (0) 2695‐5836
Maintain “Overweight” rating We change our recommendations for AOT, BTS and THAI to Outperform, vs. Trading BUY previously, assigning a new rating introduced by KT ZMICO Research to our transport sector coverage. We still recommend “overweight” for the sector as we believe earnings in 2015E will turn around, especially the aviation sector. We select LCCs (NOK & AAV) for the top picks in the aviation sector, while BTS is the top pick for dividend lovers. AOT’s passenger volume expanded 10.7% in Nov‐14 AOT reported passenger volume of 8.4mn in Nov‐14, increasing by 10.7% YoY, consisting of domestic passengers of 3.4mn (+19.9% YoY) and international passengers of 4.9mn (+5.1% YoY). For 2MFY15 (Oct – Nov 14), AOT’s passengers increased by 11% YoY, vs. our assumption of +16% YoY for the whole year. Meanwhile, its aircraft volume expanded by 9% YoY, vs. our assumption of +12% for the whole year. We maintain our projection. LCC passenger volume growth outpaced flight volume expansion Total LCC passenger volume growth at AOT’s six airports of +32% YoY in Nov‐14 still outpaced LCC’s flight volume growth of +30% YoY. As a result, we still believe that LCC’s airfare pressure will continue to be relieved. We maintain our view that airlines’ performance will improve QoQ in 4Q14E, especially AAV, which will likely benefit from international passenger volume improvement. We do not expect airlines’ earnings in 4Q14E to receive much of a positive impact from the lower global jet fuel price currently owing to the hedging positions. Unfavorable BTS statistics from high base BTS posted ridership growth of +1.6% YoY to 623,800 trips/day in Nov‐ 14, vs. +4.4% YoY in Oct‐14. We believe this could be the result of a high base from the same period last year (Nov‐13) when BTS gained extra ridership from the political protests on Bangkok’s streets. For 8MFY15 (Apr 14 – Nov 14), BTS’s ridership grew by 2.3% YoY, vs. our forecast of +5% YoY for the whole year (end Mar‐15). Accelerating motorist volume growth for BECL BECL’s traffic volume increased by 4.5% YoY to 1.17mn vehicles in Nov‐ 14, accelerating compared to +3.2% YoY in Oct‐14, especially the urban sector. We expect BECL’s traffic volume to have benefited from the lower domestic benzene fuel price. For 11M14, BECL’s traffic volume still declined slightly by ‐0.4% YoY, vs. our forecast of +0.0% YoY for the whole year.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
Maintain “Overweight” rating We change our recommendations for AOT, BTS and THAI to Outperform, vs. Trading BUY previously, assigning a new rating introduced by KT ZMICO Research to our transport sector coverage. The rating for the rest of stocks is maintained. We still recommend “overweight” for the sector as we believe earnings in 2015E will turn around, especially for the aviation sector, thanks to passenger volume growth after being pressured by the political conflict in 1H14, as well as the lower global jet fuel price. We select LCCs (NOK and AAV) for the top picks in the aviation sector, while BTS is the top pick for dividend lovers. Figure 1: Rating and valuation summary Rating AAV
Buy
AOT*
Outperform
TP
PER (x)
PBV (x)
ROE (%)
Div. yield (%)
(Bt)
13
14E
15E
13
14E
15E
13
14E
15E
13
14E
6.70
24.2
343.4
18.5
1.1
1.1
1.1
4.9
0.3
6.0
-
-
15E 2.2
280.00
41.0
33.8
27.1
4.4
4.2
3.8
11.7
12.8
14.8
1.6
1.2
1.5
BA
Buy
27.50
37.9
155.6
23.5
4.8
2.2
2.1
12.2
2.1
9.2
3.6
0.3
2.1
BECL
Buy
45.00
16.4
10.9
10.3
1.6
1.5
1.4
9.2
14.5
14.2
4.2
4.3
4.6
BTS**
Outperform
11.30
54.2
45.3
44.8
2.0
2.2
2.4
4.0
4.6
5.2
6.1
7.0
6.2
NOK
Buy
18.90
7.9
n.m.
10.7
1.8
1.9
1.8
39.3
(9.7)
17.4
7.7
-
4.7
PSL
Buy
26.00
(35.8)
735.5
89.6
1.0
1.0
1.0
(2.8)
0.1
1.1
2.8
1.4
1.4
THAI
Outperform
18.00
(5.6)
n.m.
27.4
0.6
0.7
0.7
(19.2)
(15.1)
2.4
-
-
-
17.5
n.m.
31.5
2.2
1.9
1.8
7.4
1.2
8.8
3.3
1.8
2.8
Average
Source: KT ZMICO Research Note: *Fiscal year ended September, **Fiscal year ended March
Figure 2: Earnings summary Company AAV AOT* BA BECL
Net profit (Btm)
Norm. profit (Btm)
Norm. EPS (Bt)
Norm. EPS growth (%)
13
14E
15E
13
14E
15E
13
14E
15E
13
14E
15E
1,043
118
1,198
914
64
1,198
0.19
0.01
0.25
13.7
(93.0)
1,760.1
16,347
12,220
15,048
9,935
12,029
15,048
6.95
8.42
10.53
51.7
21.1
25.1
932
291
1,900
888
287
1,900
0.56
0.14
0.90
(6.1)
(75.6)
561.2
4,835
2,750
2,855
1,800
2,708
2,855
2.34
3.52
3.71
20.9
50.4
5.5
12,645
2,981
2,609
2,155
2,577
2,609
0.18
0.22
0.22
118.6
19.6
1.2
1,066
(430)
786
1,066
(430)
786
1.71
(0.69)
1.26
68.8
(140.3)
n.m.
528
11
168
(421)
20
168
(0.40)
0.02
0.16
165.1
n.m.
720.5
THAI
(12,047)
(7,965)
1,203
(5,868)
(16,049)
1,203
(2.69)
(7.35)
0.55
(964.0)
173.5
n.m.
Total
25,349
9,976
25,768
10,469
1,207
25,768
BTS** NOK PSL
Source: KT ZMICO Research Note: *Fiscal year ended September, **Fiscal year ended March
Figure 3: Share price performance & relative performance vs. SETTRANS and SET Closed (Bt)
Price change (%)
Relative to SETTRANS
Relative to SET
22/12/14
1W
1M
3M
12M
1W
1M
3M
12M
1W
1M
3M
12M
AAV
4.56
(2.1)
8.1
(0.4)
8.1
(4.8)
5.1
(9.3)
(24.6)
(6.1)
10.7
0.9
(6.4)
AOT
25.0
65.2
16.2
32.5
(2.2)
10.6
26.3
50.8
(3.9)
7.6
285.00
1.8
8.0
BA
21.30
-
4.9
BECL
(0.9)
5.0
(2.7)
2.0
38.25
3.4
(2.5)
-
11.7
0.7
(5.5)
(8.8)
(21.0)
(0.6)
0.1
1.3
(2.8)
BTS
9.80
3.2
(3.9)
3.2
10.7
0.5
(6.8)
(5.7)
(22.0)
(0.8)
(1.2)
4.5
(3.7)
NOK
13.40
-
13.6
(17.8)
(36.2)
(2.7)
10.6
(26.6)
(68.9)
(3.9)
16.2
(16.5)
(50.6)
PSL
14.50
6.6
(24.9)
(43.1)
(32.2)
3.9
(27.8)
(52.0)
(64.9)
2.7
(22.2)
(41.8)
(46.7)
THAI
15.10
4.1
1.3
(3.2)
2.0
1.5
(1.6)
(12.0)
(30.7)
0.2
4.0
(1.9)
(12.4)
Source: KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 6
Tourist arrival improvement continued in Nov‐14 The Department of Tourism reported tourist arrivals of 2.4mn in Nov‐14, increasing by 2.5% YoY, the second month of positive growth after falling sharply since early this year from political tension. However, the growth figure decelerated compared to +6.1% YoY in Oct‐14 due to the continuation of martial law, in our view. In Nov‐14, East Asian tourists continued to increase by +10.8%, followed by South Asia (+3.3%). Meanwhile, tourist numbers from Europe still declined by 9.5% and Middle Eastern tourists fell by 3.2%. Nevertheless, we believe overall tourist numbers will continue to improve for the next couple months due to the traditional high season and a low base. AOT’s passenger volume expanded 10.7% in Nov‐14, led by domestic volume AOT reported passenger volume of 8.4mn in Nov‐14, increasing by 10.7% YoY, consisting of domestic passengers of 3.4mn (+19.9% YoY) and international passengers of 4.9mn (+5.1% YoY). Passenger volume from LCC still supported AOT’s passenger volume growth as indicated by the growth figure of Don Muang International Airport (DMK) at +48.8% YoY in Nov‐14. For 2MFY15 (Oct – Nov 14), AOT’s passengers increased by 11% YoY, vs. our assumption of +16% YoY for the whole year. Meanwhile, its aircraft volume expanded by 9% YoY, vs. our assumption of +12% for the whole year. We maintain our projections, as we believe the growth figure will accelerate for the next couple months. LCC passenger volume growth still outpaced flight volume expansion Total LCC passenger volume growth at AOT’s six airports of +32% YoY in Nov‐14 still outpaced LCC’s flight volume growth of +30% YoY. As a result, we still believe that LCC’s airfare pressure will continue to be relieved. International LCC passenger volume expanded significantly by +20% in Nov‐14, while domestic passenger volume increased by 39% YoY. We maintain our view that airlines’ performance will improve QoQ in 4Q14E, especially AAV, which will likely benefit from the improvement of international passengers. However, we expect NOK to continue report a net loss in 4Q14E. We do not expect airlines’ earnings in 4Q14E to receive much of a positive impact from the lower global jet fuel price currently owing to the hedging positions. Figure 4: International tourist arrivals by month
Figure 5: AOT’s LCC passenger & flight volume growth
Source: Department of Tourism, AOT
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 6
Figure 6: Passenger volume growth trend (%YoY) for AOT’s six airports SBIA
DMK
HKT
CNX
HDY
CEI
Total
LCC
(0.1)
24.8
9.6
19.5
18.4
11.5
7.3
26.8
Jan-14
(2.6)
20.5
11.8
22.2
7.4
20.9
5.5
21.0
Feb-14
(10.1)
14.3
4.5
16.9
2.9
23.6
(1.4)
15.6
Mar-14
(14.0)
18.6
1.6
15.3
12.2
22.6
(3.1)
19.0
Apr-14
(8.8)
27.5
7.9
25.7
22.8
40.3
3.7
27.8
May-14
(14.3)
25.3
0.2
16.7
20.5
29.5
(1.4)
24.9
Jun-14
(24.6)
18.0
(12.6)
17.6
29.4
21.9
(10.7)
16.5
Jul-14
(15.6)
25.4
(9.7)
21.1
36.4
30.3
(3.0)
22.2
Aug-14
(10.7)
29.4
(6.8)
21.9
34.6
33.4
1.0
23.3
Sep-14
(15.6)
35.6
(8.9)
16.0
19.0
15.5
(1.8)
25.5
Oct-14
(4.5)
51.7
1.9
28.4
32.7
34.7
11.2
37.6
Nov-14
(2.9)
48.8
3.2
25.0
28.9
19.6
10.7
32.3
Dec-13
Source: AOT
Figure 7: Aircraft movement growth trend (%YoY) for AOT’s six airports SBIA
DMK
HKT
CNX
HDY
CEI
Total
LCC
Dec-13
14.2
23.7
11.3
23.7
12.0
22.4
16.9
32.4
Jan-14
11.9
25.7
12.2
29.4
9.7
39.0
17.0
31.4
Feb-14
3.7
17.6
4.4
23.1
4.2
51.7
9.3
26.8
Mar-14
1.5
19.7
7.4
21.7
13.1
58.1
9.4
27.9
Apr-14
1.1
22.6
12.2
19.3
39.9
71.7
11.1
34.5
May-14
(2.6)
18.7
6.8
18.8
41.0
95.9
7.8
34.0
Jun-14
(9.3)
8.3
(1.0)
13.7
33.1
50.3
(0.3)
19.4
Jul-14
(9.0)
11.1
(5.2)
16.5
31.2
47.9
(0.0)
18.1
Aug-14
(8.8)
14.2
(4.0)
17.2
40.5
48.3
1.3
19.5
Sep-14
(7.6)
14.8
(0.5)
21.7
24.7
53.4
2.6
19.9
Oct-14
(4.4)
25.6
5.4
24.2
34.2
54.5
8.6
31.8
Nov-14
(4.8)
29.5
8.9
31.0
24.6
34.4
9.6
30.0
Notes: SBIA = Suvarnabhumi International Airport DMK = Don Muang International Airport HKT = Phuket International Airport CNX = Chiang Mai International Airport HDY = Had Yai International Airport CEI = Mae Fah Luang - Chiang Rai International Airport LCC = Low Cost Carriers
Source: AOT
Unfavorable BTS statistics from high base BTS posted ridership growth of +1.6% YoY to 623,800 trips/day in Nov‐14, vs. +4.4% YoY in Oct‐14. We believe this could be due to the high base from the same period last year (Nov‐13) when BTS gained extra ridership from the political protests on Bangkok’s streets. For 8MFY15 (Apr 14 – Nov 14), BTS’s ridership grew by 2.3% YoY, vs. our forecast of +5% YoY for the whole year (end Mar‐15). This could create downside risk to BTSGIF’s bottom line but it should not have much of an impact on BTS (33% holding in BTSGIF).
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 6
Figure 8: BTS’s ridership trend update Total
Weekday
Ridership (‘000 trip)
Ridership/ day (trip)
% YoY
Ridership (trip)
Ridership/ day (trip)
Dec-13
17,289
557,719
4.5
11,486
638,103
3.4
Jan-14
19,862
640,731
17.1
15,591
708,668
17.9
Feb-14
18,691
667,550
20.1
13,924
732,824
17.6
Mar-14
18,530
597,743
(0.3)
13,882
661,026
(0.4)
% YoY
Apr-14
16,747
558,232
4.1
12,008
667,109
4.1
May-14
17,249
556,432
1.4
12,287
646,702
3.3
Jun-14
17,282
576,081
0.7
13,380
673,145
6.8
Jul-14
18,136
585,036
2.7
14,241
647,297
2.9
Aug-14
18,407
593,786
(1.1)
12,990
683,691
2.3
Sep-14
18,099
603,301
4.9
14,520
660,012
3.9
Oct-14
18,939
610,951
4.4
14,804
672,952
4.2
Nov-14
18,714
623,800
1.6
13,716
685,808
2.7
Source: BTS
Accelerating motorist volume growth for BECL BECL’s traffic volume increased by 4.5% YoY to 1.17mn vehicles in Nov‐14, accelerating compared to +3.2% YoY in Oct‐14, especially the urban sector. We expect BECL’s traffic volume to have benefited from the lower domestic benzene fuel price following the drop of global oil prices coupled with the change in the energy policy by the NCPO. For 11M14, BECL’s traffic volume still declined slightly by ‐0.4% YoY, vs. our forecast of +0.0% YoY for the whole year. Figure 9: BECL’s traffic volume growth trend (% YoY)
Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14
FES (4.5) (9.1) (7.1) (5.6) (0.3) (4.4) (2.4) (1.0) (1.3) 2.7 2.3 2.8
SectorA (6.2) (6.4) (2.7) (3.6) (0.9) (3.9) (2.5) (0.6) (1.1) 2.4 1.5 3.1
SectorB (10.6) (6.3) 1.2 (7.7) (5.7) (7.8) (2.9) (3.3) (4.1) 0.9 0.8 5.9
Urban (7.6) (6.3) (1.5) (5.0) (2.4) (5.1) (2.6) (1.5) (2.0) 1.9 1.3 4.0
SectorC (3.3) (0.3) 3.2 3.0 4.4 2.4 1.5 2.3 2.4 4.9 4.6 4.9
SectorD (5.1) (7.5) (4.7) (2.7) 0.8 (1.3) (0.2) 2.0 2.0 6.8 7.4 8.9
Total BECL (5.4) (6.5) (3.2) (3.5) 0.0 (3.0) (1.5) (0.1) (0.4) 3.5 3.2 4.5
NECL (3.8) 3.3 5.8 4.5 3.9 4.4 (2.6) (1.8) 3.1 2.7 3.7 4.1
Source: BECL
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 6
BECL+NECL (5.3) (5.9) (2.7) (3.0) 0.2 (2.5) (1.5) (0.2) (0.2) 3.4 3.2 4.5
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 6 of 6
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.
