Airports of Thailand Public Company Limited (AOT) announced on November 25, 2021, that its Board of Directors had approved an extension for implementing assistance measures for airlines and concessionaires affected by the Coronavirus Disease 2019 (COVID-19) pandemic at all six airports under AOT’s supervision by offering concession charges, office and state property rents, terminal and building service charges, and landing charges reductions.
Despite the government sector has imposed a reopening policy since November 1, 2021, a large number of concessionaires continue to gradually terminate their contracts and/or still have no confidence in reopening their businesses, adversely affecting public services; airlines and concessionaires have been continuously impacted by the COVID-19 pandemic; and a complete business recovery is unlikely to be achieved by 2022.
To ensure continued operations of airlines and concessionaires deemed as crucial parts of the supply chain in aviation and airports, the Board of Directors therefore resolved to approve measures to support business status of airlines and concessionaires at all six airports under AOT’s supervision. The highlights are as follows:
1) Exemption of and reduction in office and state property rents, terminal and building service charges, fixed monthly concession charges, landing charges and parking charges shall end on 31 March 2023, from previously on 31 March 2022.
2) Extend another one year for the concession period for concessionaires operating commercial activities at all six airports under AOT’s supervision, from the end date of the existing concession period without additional collateral provided that the collateral already covers outstanding debts after the concession period.
The analyst stated that this announcement would be unfavorable to AOT’s earnings outlook for fiscal years 2022-2023, despite AOT is confident that its revenue will increase by 17.76% in fiscal year 2022, to THB3,037 million, and by 140.62% in fiscal year 2023, both of which are higher than the case where no measure is applied.
KGI Securities (KGI) said that this news is negative for AOT’s earnings outlook during 2022-23 as the extension of assistance measures will negatively affect the company’s revenues and bottom line directly. Hence, it revised its earnings projections to a net loss of THB2.3 billion (from a net profit of THB4.1 billion) in 2022 and to a net profit of THB15.6 billion (from THB22.9 billion) in 2023.
KGI expected these measures to reduce AOT’s valuation around THB1.0/share or 1.3% from its previous target price. Given AOT’s turnaround story, KGI maintains a rating of Outperform with a new 2022 DCF-based target price of THB73.50 (WACC 9%; TG 3%), from THB74.50.
AOT’s share today posted a closing price at THB59.50/share, down THB0.50/share or 0.83%, with a trading value of THB1,950 million.
