Preview 1QFY25: Buoyed by high season
We forecast AOT’s core earnings in 1QFY25 at Bt5.5bn, up 18% YoY and 25% QoQ. The high season for tourism, which brings in international passengers and consequently earnings in 1Q-2QFY25 is a short-term catalyst for share price. We forecast FY2025 core earnings at Bt23bn or 18% growth, assuming international passengers grow 16% to 84mn in FY2025 to reach 100% of pre-COVID-19 level. AOT is on our top pick list for tourism sector. We keep our Outperform rating on AOT with an end-2025 DCF TP of Bt72/share.
Growing Thai tourism. Thailand welcomed 35.5mn international tourist arrivals, growing 26% YoY to 89% of pre-COVID-19 level in 2024 and we maintain our forecast of 40mn international tourist arrivals in 2025 to reach 100% of pre-COVID-19 level. Continuing from 2024, with the visa exemption as a foundational support, the Thai government remains focused on boosting tourism to stimulate the economy. This includes collaboration with the governments and airlines of target countries to increase flight frequencies: China, India, the UK, Germany, Eastern Europe, and the Middle East, plus country-specific campaigns.
High tourism season driving international passengers. AOT benefits directly from the growing number of international tourists into Thailand, as operations and earnings are closely tied to international passenger volume. In 1QFY25 (October–December 2024), international passenger passthrough at its six airports was 20.9mn, up 23% YoY and 15% QoQ to 102% of pre-COVID-19 level (climbing from 83% in 1QFY24 and 87% in 4QFY24). The strong travel demand is expected to continue in January (up MoM) on seasonality. As for airlines, AAV has increased capacity by ~50% YoY for India routes (5% of its capacity) and ~4% YoY for China routes (8% of its capacity) in 1Q25. It is seeing strong forward bookings for international routes, giving a ~70% load factor in January and ~50% load factor in February (based on data at the beginning of January). We are monitoring a possible plunge in Chinese arrivals due to safety concerns following the disappearance (and subsequent rescue) of a Chinese actor. This may reduce the number of tourists from China during the Chinese New Year holiday from January 28 to February 4. However, we believe a quick response by the Thai government and relevant authorities to take action will build confidence and help mitigate the impact. Our check with hoteliers shows no significant cancellations related to this incident.
Expect stronger earnings in 1Q-2QFY25. We forecast AOT’s core earnings in 1QFY25 at Bt5.5bn, up 18% YoY and 25% QoQ, with high season continuing to drive earnings in 2QFY25 (up YoY and QoQ). For FY2025 (October 2024–September 2025), we forecast core earnings at Bt23bn or 18% growth, assuming international passengers grow 16% to 84mn in FY2025 from 72.7mn in FY2024 to reach 100% of pre-COVID-19 level. We maintain our Outperform rating with an end-2025 DCF TP of Bt72/share (WACC at 7.5% and LT growth at 2%).
Risks. Global economic slowdowns that will cut travel demand. We see ESG risks as environmental issues (E) and social issues such as safety (S).
Download PDF Click >AOT250113_E.pdf
