The financial strains at King Power Duty Free Company Limited (KPD) are casting a long shadow over its ongoing contract talks with Airports of Thailand Public Company Limited (SET: AOT), with recent disclosures indicating the duty-free giant is facing deeper losses and a rapidly declining equity base as of year-end 2024.
KPD, which operates King Power’s extensive duty-free business across major Thai airports, has just released its 2024 financial statements. The results reveal a net loss of THB 937 million, a significant deterioration from the previous year’s net loss of THB 651 million in 2023. The company’s financial resilience is now under heightened scrutiny; its total shareholders’ equity plummeted from THB 1.6 billion at the end of 2023 to a mere THB 672 million as of December 2024.
A particularly worrying element for stakeholders is KPD’s surging interest expenses, which soared by 272% year-on-year to THB 640 million. The jump reflects both the mounting debt burden and tightening financial conditions facing Thailand’s most prominent duty-free operator, as it grapples with subdued travel demand, fierce competition, and a host of external headwinds ranging from pandemic aftershocks to geopolitical uncertainties.
The latest financials land at a critical juncture. KPD is in the midst of intense negotiations with AOT, seeking relief measures including the removal of a minimum guaranteed payment clause from its airport concession contracts. King Power has argued that multiple external shocks—ranging from a downturn in Chinese tourist arrivals, ongoing global economic instability, to government policy changes affecting duty-free operations—have severely eroded its earnings capacity.
AOT, however, has so far rebuffed King Power’s proposals, insisting that changes can only occur following formal board approval and the completion of an independent review. As contract discussions continue, AOT’s position may now be strengthened by KPD’s weaker-than-expected financial standing, providing it more leverage to push for terms that are favorable to the airport operator.
Market watchers are also keeping a close eye on AOT’s share price, which saw a 6% spike yesterday despite no apparent new developments beyond KPD’s numbers that should weigh the stock down.
CGS International Securities (Thailand) (CGSI), commenting on the situation, noted that KPD’s FY24 net loss came in lower than their worst estimates, but the alarming decline in equity underlines the company’s vulnerability. CGSI maintains its base case for the removal of the minimum guarantee, given KPD’s precarious financial footing and ongoing appeals for contract relief. The broker reiterates its “Reduce” rating on AOT with a target price of THB 20, signalling uncertainties still looming over the outcome of these high-stakes negotiations.
