Introduction

In the bustling landscape of the Thai stock market, two powerhouse companies have recently come under the analytical spotlight: Airports of Thailand (AOT) and Stecon Group (STECON). This analytical report, crafted by UOB Kay Hian Securities, provides a meticulous breakdown of these companies’ financial standings, strategic initiatives, and future prospects, offering investors a comprehensive guide to making informed decisions.

Airports of Thailand (AOT): Winter is Coming

Company Overview

Airports of Thailand (AOT) is the dominant force in Thailand’s aviation sector, operating six out of the 38 airports in the country. These six airports contribute a staggering 83% of the total passenger throughput, making AOT a pivotal player in the nation’s infrastructure.

Financial Performance and Analyst Insights

The recent analyst meeting shed light on AOT’s 4QFY24 earnings, which, despite showing a net profit of Bt4.27 billion—a 24.5% increase year-on-year—were deemed weak due to unexpectedly high seasonal expenses. Nevertheless, the positives seem to outweigh the negatives, with an optimistic outlook for the winter flight schedule and progress in Passenger Service Charge (PSC) increases.

Strategic Developments

AOT has announced the reclamation of commercial areas from King Power Suvarnabhumi (KPS) for the East Expansion construction at Suvarnabhumi Airport. This development, although resulting in a 5% decrease in KPS’s commercial area, is expected to have minimal impact on AOT’s earnings—estimated at less than 1% annually until 2027.

Future Outlook and Recommendations

Looking ahead, AOT anticipates strong growth from international passengers, with a projected 23.3% increase in the winter flight schedule. The company’s strategic enhancements at Suvarnabhumi Airport, including automated immigration gates, are set to boost capacity significantly. UOB Kay Hian maintains a “BUY” recommendation with a target price of Bt70.00, underscoring AOT’s robust growth fundamentals and promising long-term prospects.

Stecon Group (STECON): Navigating Uncertainty

Company Overview

Stecon Group operates as a multi-faceted holding company, with core businesses spanning construction contracting, utilities, power, logistics, and transportation. Despite its diverse portfolio, the company faces near-term challenges.

Financial Performance and Analyst Insights

The 3Q24 results painted a challenging picture for STECON, with a net loss of Bt147 million. This downturn was attributed to reduced construction revenue as several projects neared completion and additional expenses linked to the Bueng Nong Bon drainage tunnel and investments in the Pink and Yellow Line train projects.

Strategic Developments

Despite current setbacks, STECON is eyeing new orders in 4Q24 that could enhance its backlog beyond Bt100 billion by year-end. The company is focusing on private sector projects, including infrastructure and data centers, to drive future growth. Additionally, STECON’s commitment to the Clean Fuel Project (CFP), despite payment delays, highlights its strategic alignment with regulatory conditions.

Future Outlook and Recommendations

The path to recovery is expected in 2025, with core operations projected to strengthen, driven by progress on key projects and the resolution of current repair costs. However, earnings remain uncertain for 4Q24-1H25. UOB Kay Hian maintains a “HOLD” recommendation, adjusting the target price to Bt8.60, based on a cautious outlook for near-term earnings but optimism for future project wins.