Maybank IB values Bangkok Airways business at THB15.60/share, derived from 13x FY25E P/E, and investments in BDMS, BAREIT, WFS – PG Cargo, and BAFS at THB11.10/sh combined.
The house notes that Bangkok Airways has a well-diversified source of revenue (67% airline and 33% recurring income from airports, ground business and dividends), and its airline business operates as a cash cow where competition is limited. However, Maybank IB said it sees limited upside in top-line growth as its average fare is already near an historical high and capacity expansion is limited. The house views its current valuation of 12x P/E (-0.75 SD 10-year average) as reasonable for 11% pa EPS growth in FY24-26E. Key downside risk is potential increase in concession fees paid to AOT for the ground and cargo businesses.
Airline business cash cow
BA has been benefiting from high airfares on the Samui route (60% of ticket revenue), as flights landing there are exclusive to BA. House foresees limited upside in BA’s average fare growth in FY25-26E, as its fares for Samui routes are near historic highs. Despite ASK at only 50% of its 2019 level, BA is only leasing a few more aircraft in FY25-26E. As a result, its conservative strategy is likely to limit revenue growth potential from its airline business. The growth drivers include airline business with EBITDA at +5% CAGR in FY24-26E and airport services at +7% CAGR. Passenger fares contributed 75%/76% of FY22/23 core revenue, respectively. Airport related services generated 22% of core income during this period.
BA plans to triple Samui airport capacity to 6m passengers per year with a THB1.5b investment cost (COD in FY28). The house thinks it will be challenging to hit management’s target of 4m passengers pa post-renovation. A BA-led consortium, ‘UTA’, has contracted to build a new aviation hub at U-Tapao airport in Rayong province, which could eventually add THB4.60/sh to the
valuation but completion is only currently scheduled for FY29.
Downside from higher concession fees
Maybank IB said it sees significant downside risk to BA’s core profit from FY27 onwards due to the potential of a hike in its revenue sharing to concessioner ‘AOT’ in its ground and cargo handling business. The concession will be terminated in Sep’26. The house estimates every 5% increase in revenue sharing from the base case of 10% will impact FY27E core profit by 5%.
