Please be advised that April 13th-14th, 2017 is our public holiday (Songkran Festival). Consequently, The Stock Exchange of Thailand (SET), The Market for Alternative Investment (MAI), The Thailand Futures Exchange (TFEX) and KT Zmico Securities Co., Ltd will be closed on this coming , Thursday and Friday .
TTW: Weak earnings outlook – Underperform (TP Bt11.20)
Earnings estimates cut with new TP of Bt11.20
TTW’s 1Q17E earnings are likely to decline YoY dragged down by weak tap water sales and CKP’s poor performance. This leads us to cut its 2017E-2018E earnings forecasts by 2.7% and 3.3%, respectively. Although the current price has limited upside to our new sum-of-the-parts valuation of Bt11.20 (down from Bt11.40), the attractive yield of 5% causes us to maintain our UNDERPERFORM rating.
Group’s water dispatch remained weak
The TTW Group’s tap water sales volume continued to soften to 90.5mn cubic meters (cu.m.) in 4M17, decreasing 1.8%YoY. Weak demand was seen at both TTW (-2.2%YoY) and PTW (-1.7%YoY). The weaker-than-expected 4M17 sales volume leads us to trim our full-year growth forecast to -0.4%YoY, from +0.4%YoY previously. Our growth forecasts for 2018E-2019E are also revised down to 0.8%YoY and 1.2%YoY, respectively.
2017E-2018E earnings estimates cut
Our 2017E-2018E earnings estimates are revised down by 2.7% and 3.3%, respectively. In addition to the downward revision of tap water sales volume, our model is also adjusted in line with our recent earnings downgrade on CKP. The lower-than-expected power generation of Nam Ngum 2 in 4M17 (-19%YoY to 538GWh) led us to cut CKP’s 2017E-2018E earnings forecasts by 43% to Bt250mn and 24% to Bt379mn, respectively.
Slow earnings in 1Q17E
We expect TTW to post a net profit of Bt595mn (EPS: Bt0.15) in 1Q17E, down 4%YoY. This is mainly attributed to a slow recovery in the tap water business and a shared loss from CKP. Earnings from tap water should increase by 2%YoY on the back of efficient cost control and a lower interest burden. Its revenue should be flat YoY, as weak sales volume (-1.8%YoY to 67.6mn cu.m.) should be offset by a higher tariff. Its core earnings should also be hurt by CKP’s results. We estimate CKP to mark a loss of Bt97mn in 1Q17E, largely due to the poor performance of Nam Ngum 2 and BIC1 (maintenance shutdown in Jan-17). As a result, TTW would share a loss from CKP of Bt25mn, reversing from shared profit of Bt12mn in 1Q16. On a QoQ basis, its earnings should gain 5% on slight improvement in the tap water business together with a narrower shared loss from CKP.
ふーーん、タイ人も金持ちになりましたねえ。
カフェといえば、チェンマイにlove at first biteというカフェがあるのですが、甘党の私にはケーキが最高でした。ドリンクもレベル高かった。
しかし、ニマンヘミン通りのスタバの横前に二つ位のカフェ密集地があって、私が一番好きだったのはスタバの斜め前のカフェだったんですが、去年行ったときは潰れていました。スタバの横のカフェも潰れていました。
共倒れか?もしくはカフェ人気が陰ったのか?スタバだけが生き残っていました。タイのお昼はクーラーの効いたカフェが良いです。
どこのカフェも椅子が心地よかったのがだめだったのでしょうか?
AUの椅子は木であれならわたしは30分で出たくなると思います(笑)。
でも取り合えずは、株価は人気投票ですから、業績が良ければ株価はあがると思いました。
Rental cost negotiations continue with expected mutual benefit
AOT believes the negotiations with the Treasury Department regarding new rental costs should be mutually beneficial. The rental contract may be terminated if the cost increase makes the project unfeasible. Nevertheless, we believe this issue will still be a negative catalyst for AOT and maintain an “Underperform” rating, with the TP rolled over to FY18E at Bt47. Every Bt1bn rental cost increase will lower our FY17E net profit projection and TP for AOT by 3% and 1%, respectively.
Revise up passenger volume growth in FY17-18E to 8% for each year
AOT’s passenger volume in May-17 (preliminary figures) grew by 5.8% YoY; +7.3% for international and +4.0% YoY for domestic. YTD (fiscal year), passenger volume grew by 7.2%, vs. AOT’s own target of +7.0% YoY for the whole year. However, with the low-base impact from the crackdown on illegal tour operators in 2HFY16, we believe passenger volume in 2HFY17E will likely accelerate. As a result, we decide to revise up passenger volume growth in FY17-18E to +8% p.a., vs. +7% previously.
Custom Free Zone operation to add revenue of ~Bt500mn in FY18E
Last year, AOT terminated the Custom Free Zone concession contract with the previous operator and turn back to its own operation. AOT expects to increase this revenue by Bt500mn in FY18E due to more efficient management. Meanwhile, AOT expects to increase new business from this operation in the future, especially related to e-commerce, etc.
Bidding for new duty free operator to start by yearend
AOT insists that the concession contracts with King Power to operate duty free at SBIA, which will expire in Sep-20, are legal and accountable, including the Point of Sale (POS) system. The tendering process for seeking a new operator of the duty free will likely start by late this year or early next year. The operator for the new terminal (Phase II expansion) will likely be chosen at the same time.
Slightly lower earnings projections in FY17E, FY18-19E maintained
We slightly lower norm. profit in FY17E by 3% to Bt22.1bn, vs. Bt22.7bn previously, owing to: 1) a lower revenue projection by 2% to Bt55.1bn due to lower average PSC (due to a higher portion of domestic passengers) and lower flight movement growth to +5%, vs. +8% previously, and 2) an upward revision to operating costs by 1.7% due partly to a rental cost increase for regional airports. However, we maintain our norm. profit projections in FY18-19E as the upward revision of passenger volume growth and additional revenue from the Custom Free Zone will likely offset the cost increase.