AOT Shares Need to Break Out, or Else

Witawat (Ed) Wijaranakula, Ph.D.
Wed Jan 4, 2017

Airports of Thailand PCL (SET:AOT), 70% stake owned by the Ministry of Finance as of December 17, 2015, operates two principal business segments, which are the airport business and hotel business. The company manages and develops Suvarnabhumi, Don Mueang, Chiang Mai, Hat Yai, Phuket and Mae Fah Luang Chiang Rai airports. Their non-aeronautical activities include office and state property rentals, services and concessions. AOT is also involved in the development of hotels near Suvarnabhumi airport. The company’s subsidiaries include Suvarnabhumi Airport Hotel Company Limited.

Total air traffic movement, including arrivals and departures, which peaked at 67,690 in January 2016, remained relatively flat, as November total air traffic grew just 7.12% year-on-year to 66,854, compared to 62,410 in November 2015. Total passenger movement, which also peaked in January 2016 at 10.92 million, dropped to 9.77 million in November, up just 3.1% year-on-year from 9.48 million in November 2015. Overall, long-term trends for both air traffic and passenger movement are still on the upside. Note that January is a typical peak month for AOT, followed by December.

Low-cost carrier (LCC) traffic movement was up 14.62% year-on-year to 31,615 in November 2016, compared to 27,583 during the same period the previous year. LCC passenger movement increased 7.9% year-on-year to 4.49 million in November 2016, compared to 4.16 million in November 2015.

AOT said on November 29 that its revenues for the fourth-quarter 2016, ending September 30, increased 16.72% year-on-year to 12.78 billion baht, missing the 12.88 billion baht consensus estimate of 4 analysts, according to the Financial Times. For the full-year 2016, total revenues were 52.78 billion baht, up 15.99% from the previous year. Aeronautical revenues were 21.19 billion baht, up 12.151% year-on-year. Non-aeronautical revenues, about 43% of the total revenues, which are mostly concessions, increased 21.34% year-on-year to 21.77 billion baht. 

The company posted its fourth-quarter 2016 earnings increase of 20.40% year-on-year, or 3.01 baht per share, beating the 2.92 baht per share consensus estimate of 4 analysts. For the full-year 2016, earnings were 13.70 baht, up 18.92% year-on-year.

For 2016, AOT reported a dividend of 6.83 baht a share, which represented a 4.43% increase from 2015. The 21 analysts covering the company expect dividends of 6.87 baht a share for the upcoming fiscal year, representing a year-over-year increase of 0.54%. The next earnings announcement is expected on February 14, 2017. The consensus estimates are EPS of 3.52 baht on revenues of 12.23 billion baht for the first-quarter 2017. 

From our technical viewpoint, AOT shares broke down the descending channel, but bounced off the trendline support at 355 baht in mid-November. The stock is now bumping into the trendline resistance of the descending channel and the 400 baht psychological level. AOT needs to break out, or else it could pull back to retest the trendline support at around the 360 baht level. According to the Financial Times, the consensus amongst 23 polled investment analysts covering AOT gave the company an Outperform rating, with the median 12-month price target of 435 baht per share, as of December 24. 

Disclosure: No position and no recommendation.


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