Overview of Airports of Thailand (AOT)

Airports of Thailand (AOT) operates six of the 38 airports in Thailand, which collectively handle 83% of the country’s total passenger throughput. AOT’s strategic position in the aviation sector makes it a critical player in Thailand’s travel and tourism industry.

Investment Recommendation

The report maintains a BUY recommendation for AOT with a target price of Bt70.00, representing a potential upside of 27.3% from the current share price of Bt55.00.

1QFY25 Earnings Preview

AOT is expected to report a net profit of Bt5.78 billion in 1QFY25, marking a 26.7% year-on-year (yoy) increase and a 35.3% quarter-on-quarter (qoq) rise. The anticipated growth is driven by robust international passenger volumes during the high travel season, which saw a 23.4% yoy increase.

The company’s total revenue is forecasted to increase by 19.3% yoy and 11.7% qoq to Bt18.73 billion. Key revenue contributors include:

• Aero Revenue: Bt8.93 billion (+26.1% yoy, +15.4% qoq)
• Non-Aero Revenue: Bt9.81 billion (+13.6% yoy, +8.5% qoq)

Operating margins are also projected to expand due to strong top-line growth. The EBITDA margin is expected to stabilize at 63.5%, with the net profit margin improving to 30.9% (+1.8 percentage points yoy, +5.4 percentage points qoq).

Key Operational Statistics

A comparison of key operational metrics reveals a strong recovery towards pre-COVID-19 levels:

• International Aircraft Movements: 117,349 (+21.7% yoy, +9.0% qoq), reaching 92% of pre-pandemic levels.
• Domestic Aircraft Movements: 87,228 (+6.6% yoy, +14.0% qoq), reaching 90% of pre-pandemic levels.
• International Passenger Traffic: 20.9 million (+23.4% yoy, +15.4% qoq), achieving 94% of pre-COVID-19 levels.
• Domestic Passenger Traffic: 12.8 million (+6.6% yoy, +15.2% qoq), achieving 88% of pre-COVID-19 levels.

Growth Drivers and Challenges

Strong International Passenger Growth

The recovery in international passenger traffic is a key growth driver for AOT. Passenger volumes have reached 94% of pre-COVID-19 levels, driven by robust demand during the high travel season.

Concerns Over Chinese Market Sentiment

While media reports highlight potential challenges in the Chinese market due to cancellations from tour groups, AOT continues to see year-over-year growth in Chinese arrivals. Excluding Chinese tourists, international arrivals still grew by 17% yoy, alleviating concerns about over-reliance on one market.

Travel Safety Enhancements

AOT is enhancing travel safety by integrating biometric and AI technologies to improve passenger screening and security. This initiative aims to reassure travelers and enhance the overall passenger experience.

Expansion Plans

The new master plan for Bangkok’s Suvarnabhumi Airport (BKK) has been delayed to mid-2025. The plan includes the development of the South Terminal, which is expected to add an annual capacity of 75 million passengers and focus on the construction of Runway 4. These expansions are critical to accommodating future growth in passenger volumes.

Financial Projections

The financial outlook for AOT remains strong, with consistent growth expected through 2027:

• Net Turnover: Bt67.12 billion in 2024 to Bt86.71 billion in 2027
• EBITDA: Bt41.77 billion in 2024 to Bt59.43 billion in 2027
• Net Profit: Bt19.18 billion in 2024 to Bt33.23 billion in 2027
• EPS Growth: From Bt1.3 in 2024 to Bt2.3 in 2027
• Dividend Yield: Increasing from 1.4% in 2024 to 2.5% in 2027

Valuation

The valuation for AOT is based on a 2025 EV/EBITDA multiple of 20x, one standard deviation above its historical pre-COVID-19 trading level. This premium valuation reflects the company’s strong long-term growth prospects and its dominant market position.

Environmental, Social, and Governance (ESG) Initiatives

AOT has a strong focus on ESG principles:

• Environmental: Optimizing energy efficiency in airport operations and resource utilization.
• Social: Implementing an Aerodrome Safety Policy and conducting safety training for personnel.
• Governance: Adhering to corporate governance principles and guidelines set by the Stock Exchange of Thailand and the Securities and Exchange Commission.