Maybank Expects Concerns over Airports Transfer to AOT Are Priced In

The stock price of Airports of Thailand Public Company Limited (SET: AOT) has fallen by 9.2% over the course of seven days leading up to Thursday, comprising six days of losses and one flat-day.

According to an analyst at Maybank Securities (Thailand), the market reaction to the potential transfer of regional airports to AOT has been factored in, as the recent decline reflects the negative sentiment surrounding this news.

The Ministry of Transport is reportedly considering transferring 28 airports from the Department of Airports to AOT in an effort to alleviate a public burden amounting to approximately THB 3 billion annually.

Maybank suggests that AOT could establish a subsidiary to manage these airports, possibly including government stakes for greater operational flexibility.

In the event that all 28 airports are transferred to AOT simultaneously, the company could face a THB 3 billion loss, equivalent to 11% of the forecasted core profit of THB 27 billion for FY25. The capital expenditure required to refurbish these regional airports may surpass THB 10 billion that were previously allocated for the renovation of Krabi, Udon Thani, and Buriram airports.

Maybank views the current price correction as an opportunity to accumulate AOT shares, noting the historical underperformance of the stock following the announcement of its 2Q results (Jan-Mar), as earnings typically dip during this period of the year.

Anticipating a rebound in Chinese tourist arrivals in 3QFY24, Maybank foresees limited earnings risk stemming from potential increases in operating costs. The brokerage firm has issued a “BUY” recommendation with a target price of THB 76.00 per share.