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AOT's net profit plunges 90% as costs rise

BackDec 01, 2007

The fiscal-2007 net profit of Airports of Thailand (AOT) plunged 89.59 per cent to Bt1.09 billion, eroded by a significant increase in expenses.

The company yesterday said in a filing with the Stock Exchange of Thailand (SET) that its net profit for fiscal 2006, which ended on September 20, 2006, was Bt10.47 billion.

AOT stock yesterday closed at Bt57 yesterday, down 0.87 per cent.

An increase in revenue was unable to cushion the company against a substantial rise in expenses.

The airport operator explained that its operating earnings for fiscal 2007 surged 20.08 per cent year on year to Bt19.5 billion, driven by increasing aeronautical revenue.

The higher aeronautical revenue could be ascribed to air-traffic growth of scheduled, chartered and low-cost airlines.

"Total aircraft, passenger and cargo movement increased 11.4 per cent, 7.95 per cent and 0.61 per cent, respectively. An increase in passenger service charges on February 1 and landing and parking charges on April 1 was also a part of AOT's revenue increase," the company said.

The company's non-aeronautical revenue rose 5.93 per cent year on year to Bt355.5 million.

"However, there was a decrease in concession revenue of Bt2.09 billion, or 50.97 per cent year on year, due mainly to unrecognised revenue from duty-free and commercial activities of King Power Duty Free and King Power International at Suvarnabhumi Airport and regional airports," the company said.

The company's operating expenses in the period shot up 91.04 per cent on year to about Bt18 billion.

A 454.23-per-cent jump in depreciation and amortisation and a 163.09-per-cent increase in repair and maintenance expenses also bit into earnings.

AOT owns and manages six airports in Thailand: Suvarnabhumi, Don Mueang, Phuket, Chiang Mai, Chiang Rai and Hat Yai.

Citigroup said it recommended "sell" on AOT shares, with a target price of Bt60 apiece.

"We are bullish on AOT's long-term growth prospects and expect revenue to increase at an 18-per-cent compound annual growth rate over the next three years, driven by strong traffic growth (particularly from low-cost carriers, other emerging markets' airlines and THAI), aeronautical- and concession-rate increases and rising commercial revenue following the opening of the new Suvarnabhumi Airport. However, strong year-to-date growth means AOT has become one of the most expensive stocks in our global airport universe," the research house said.


Source: The Nation
September December 1, 2007