On Wednesday at 10:35 AM (Bangkok time), the share price of Airports of Thailand Public Company Limited (SET: AOT) dropped by 1.75% or THB 1.00 to THB 56.00, with a trading value of THB 933.62 million.
Finansia Syrus Securities (FSS) stated in the report that AOT has made the decision for King Power to discontinue its inbound duty-free operations in the six airports. A reclamation of 2,251 sq. m. is set to commence on August 1. This move is expected to lead to a reduction in AOT’s minimum guarantee, decreasing to THB 1.7 billion annually.
Under the main contract, Suvarnabhumi Airport has already seen approximately 7.5% of its duty-free area reclaimed, with the current reclamation accounting for an additional 13%. Consequently, the minimum guarantee per passenger is anticipated to drop from THB 233 to THB 216 (initially) and further down to THB 186. Thus, the minimum guarantee per passenger will now only apply to outbound, transit, and transfer passengers, set at around THB 372 per passenger.
The analyst forecasts AOT’s 2025 earnings to reach THB 26.8 billion, anticipating a possible 6% decrease, with a target price set at THB 70 per share.
Meanwhile, Krungsri Securities (KSS) holds a slightly pessimistic view on AOT, citing that the market has already factored in the impact of the duty-free operations situation. The analyst believes that this development will have a short-term effect on AOT, as the company prepares to launch multiple new projects within the next 1-2 years.
KSS anticipates a 5-6% annual negative impact on AOT’s earnings due to this issue, leading to a 5% downgrade in the target price for 2024/25 to THB 64.50 per share. Despite this, the analyst maintains a positive outlook on AOT’s profit for 2023/24 and 2024/25, expecting a significant recovery of 118% YoY and 22% YoY, respectively. As a result, KSS continues to recommend a ‘BUY’ for AOT.
