Airports of Thailand a top performer against key financial measures


Three years ago, surprisingly, the partially privatised Airports of Thailand (AoT) emerged as the most valuable airport group in the world as measured by market capitalisation, ahead of the also partially privatised, but much bigger, AENA (Spain).

Despite its recent travails, AoT still remains at the top of that particular tree with a capitalisation that is barely diminished.

That is also surprising because Thailand’s exposure to the pandemic has recently been severe, with international travel falling to virtually zero over a long period of time. Only now is domestic air travel picking up again, and it will be a long time still until international tourism gets anywhere near back to normal.

Other data arising from a consultant’s update reveal that the Auckland and Sydney airports have held firm (which may impact on a takeover bid at Sydney), that revenue growth is strongest in Mexico (within the peer group), and that both European and Chinese airports are clustered in a financial classification zone which they would not wish to inhabit for much longer.


  • Airports of Thailand has one of the highest market capitalisations of any airports operator.
  • But the foreign tourists who drove that have disappeared.
  • Domestic air travel in Thailand is returning, but not international.
  • AoT’s overall ‘premium’ valuation remains high compared with its peers.
  • Comparative data shows Sydney and Auckland airports performing well under the circumstances, also those in Mexico, but European and Chinese airports aren’t.

A research report into current/potential M&A opportunities in the airport sector has just been published by CAPA: CAPA reveals Airport Merger & Acquisition Opportunities in new report.

AoT the most valuable airport operator on Earth, driven by tourist growth that evaporated

It was only in Jan-2018 that CAPA reported that Airports of Thailand (AoT), the operator of the two main Bangkok airports and a handful of others within the country and with no foreign assets, was the most valuable airports operator in the world, having taken that mantle from Spain’s AENA. AoT was valued then at USD31 billion.

That achievement was driven by strong international tourist arrivals in 2017 – tourists who have virtually disappeared since the onset of the coronavirus pandemic.

International tourist numbers grew by 4.2% in 2019 then slumped by 83% in 2020. The year 2021 is far from being a year of recovery and has been a disaster, with international arrivals down by 99.1% in the period Jun-2021 and Jul-2021 as the coronavirus swept the country, leaving resort cities and islands like Pattaya and Phuket looking like ghost towns.

Thailand annual tourism: visitor arrivals/growth, 2019-2021 (Jan to Jul YTD)

Domestic air travel making a comeback, but not international

Where domestic tourism is concerned, AoT appears now to have moved beyond its past peak challenges as the government reduces domestic travel restrictions and domestic COVID-19 cases begin slowly to decline – at least for now.

Thailand reduced flight restrictions for domestic travel in COVID risk areas and raised aircraft passenger limits to 70% (from 50%) starting 01-Sep- 2021. While travellers will have to follow the requirements of local provinces and the recovery will be more gradual, media reports on AOT are increasingly less negative. Multiple local airlines have also announced that they will restart some routes soon.

But enticing international tourists back will be a different matter altogether.

AoT still ‘outperforming’ rivals with a high market capitalisation

Nevertheless, AOT has outperformed most global airports through the pandemic, and analysts in the region, including Morgan Stanley, see that performance continuing as Thailand and the ASEAN countries, generally, reopen.

At close of business on 01-Sep-2021 AoT had a stock price of THB62.50 and a market capitalisation of THB910.71 billion, or USD28.175 billion, which was not that far removed from the position at the beginning of 2018, and, interestingly, still well ahead of AENA (01-Sep market capitalisation USD24.48 billion).

Airports of Thailand (AoT): stock price

The low point during the past year was THB51.25 at the end of Oct-2020, and the high was THB69.5 in mid-Mar-2021.

Morgan Stanley recently upgraded AOT and expects cash burn to reduce slowly as airlines restart payments to AOT and hence reduce working capital.

With the number of COVID cases in Thailand reducing from a peak of 22,000 to 17,000 on Sunday 29-Aug (not a great reduction), and vaccination rates set to reach 60% by end 2021, Morgan Stanley expects the recovery in international tourism only in 2H2022, with visitors from ASEAN followed by recovery in Chinese tourists in 2023.

Top five (all Asia Pac) countries account for more than half of foreign visitors

The top five visiting countries (China, Malaysia, India, South Korea and Laos) accounted for 52.4% of all tourists in 2019, although in 2020 Russia and Japan forced their way into the top five of what was a very small total visitor number by comparison.

For all the country’s popularity with nationals of the US, UK and Australia, those countries make up a small percentage of the total.

Thailand:  visitor arrivals by market for 2019

However, one factor that Morgan Stanley might have overlooked is that countries in EuropeSpain, Portugal and Italy, for example – have been in this position several times and had their foreign visitor numbers grow, only to fall back again dramatically as those countries were placed on ‘red lists’ by the countries of origin of the visitors owing to the presence of new variants and/or sudden flare-ups.

There is nothing to say that a similar fate could not befall Thailand – even as far in the future as 2H2022.

Only 1/20th of normal seat capacity for a year

In fact, the seat capacity chart for Thailand in general has a depressing feel to it right now, and especially in the international segment (in the chart below).

The country has been stuck on around 1/20th of normal international capacity with barely a break since Apr-2020, and the rise in capacity (dotted green line) before the end of 2021 is predictive based on past (pre-2020) performance rather than actual events.

Similarly with what little data there is for 2022, where the prediction of capacity levels is less than 40% of the 2019 levels. Many other parts of the world have progressed well beyond that stage now, and their tourism business along with it.

Thailand: weekly total international seat capacity, 2018-2022* (projected)

AoT’s ‘premium valuation’ is maintained

But looking at the position right now, AoT’s premium valuations vs. global airports has been maintained.

The chart below measures Enterprise Value (EV)/Earnings before interest, taxes, depreciation, and amortisation (EBITDA) along the vertical axis against Earnings per share (EPS)/compound annual growth rate (CAGR) along the horizontal axis.

EV is a measure of a company's total value, often used as a more comprehensive alternative to equity market capitalisation.

EV includes in its calculation the market capitalisation of a company but also short term and long term debt, as well as any cash on the company's balance sheet. Enterprise value is a popular metric used to value a company for a potential takeover, but there is relatively little M&A activity in the industry right now.

So, taking the vertical axis first, EV determines the firm's total value, while EBITDA measures a firm's overall financial performance at an operating level without complicating and variable factors like taxes and amortizations (write-downs). The EV to the EBITDA ratio varies by industry. However, the EV/EBITDA for the Standard & Poor’s (S&P) 500 has typically averaged from 11 to 14 over the past few years. In AoT’s case it is around 35.

Airports of Thailand (AoT): Enterprise Value (EV)/Earnings before interest, taxes, depreciation, and amortisation (EBITDA) against Earnings per share (EPS)/compound annual growth rate (CAGR)

On the horizontal axis EPS/Growth CAGR measures the compound annual growth rate of earnings per share.

A high quality business should be able to grow earnings either through revenue growth (price or volume) or margin improvement (cost reduction) or a combination. Clearly this has not been the case with AoT here, where neither revenue volume nor price has been adjustable upwards, and certainly not by comparison with its peers.

The ideal scenario of course would place AoT at the top right of the chart with a very high valuation and high growth, but ideal scenarios are not on the menu so far in this decade.

Auckland and Sydney airports perform well by these measures

Indeed, none of the peer operators listed here comes anywhere close to achieving it.

The closest to it are Auckland ('Aukland', as it is spelt in the chart) and Sydney airports, which have higher than average EV/EBITDA ratios of 25 and 20 respectively, and revenue growth of 0% and 5% approximately.

The EV/EBITDA ratings are not unexpected in either case. Both are established businesses with solid business mixes, without direct competition, and both operate within a light-handed regulatory environment in which super-profits are typically made in normal times from high airline charges, with EBITDA margins (EBITDA as a percentage of revenues) exceeding 80%.

On the other hand, revenue growth has been constrained by highly restrictive travel conditions, especially for international travel, and punitive lockdowns.

But even then, Sydney’s positioning on this chart would offer sustenance to its board as it fights off a hostile bid from a consortium of Australian and foreign funds.

European airports have sometimes benefitted from geographical diversification of assets, sometimes not

European airport operators (green circles), irrespective of whether they are operating solely within Europe (e.g. Vienna Airport), in specific areas (TAV [Turkey, Eastern Europe, CIS, Middle East]), or across the globe (ADP, AENA, Fraport), are clustered close together, with EV/EBITDA ratios between six and 10 (i.e. below average) and revenue growth in the -10% to 0% range. There are no outliers.

Diversification of assets away from the home base has been beneficial in some cases, not in others (depending on where they are), but for the most part this data is representative of what the focus airport (Paris CDG, Frankfurt, Madrid etc.) is doing, and in most cases those airports have been heavily impacted by restrictive travel conditions and lockdowns as countries repeatedly introduced fresh regulations on account of very small rises in infection rates.

Mexican groups weather the pandemic storm; air travel heading back towards normality

The privatised Mexican group operators (ASUR and OMA, it isn’t clear what ‘Mexico’ means here) have weathered the pandemic storm better than most as international travel was kept as intact as possible and domestic capacity did not reduce in 2021 (not in 2020, which was as bad as everywhere else). Overall seat capacity will soon reach the level of 2019.

Consequently both of those operators, and the other one, GAP, have recorded positive financial results in the first half of 2021, accompanied by the revenue growth that is evident from this chart, 7% to 10%, but their EV/EBITDA ratio stands at a similar level to those of the European airport groups.

Low positioning on the chart shows Chinese airports still struggling

That just leaves the Chinese operators Guangzhou, Xiamen, Shenzhen and Hainan, and again, it is not clear exactly what ‘Japan’ means.

There are almost 100 airports there, about 10% of which have been privatised, and it is difficult to picture revenue growth across the board of 20%. Those Chinese airports, apart from Shanghai, are again clustered quite close together and appear to be representative of the way the pandemic affected regional airports severely in the early days, and how that impact still lingers.

The EV/EBITDA ratio in most cases is worse for those operators than for their European counterparts, and with only Hainan, which serves a tourist resort, showing revenue growth.

There is a distinct outlier here as well, in the form of Shanghai, where there are two airports. The EV/EBITDA ratio is high, as could be expected, from airports in China’s premier commercial city, but revenue growth has been around -20%, which might be explained by the way that city was protected from the pandemic (as was Beijing) by extensive domestic and international travel bans.

The chart serves a useful purpose in identifying those airports and groups that have ridden the pandemic storm and those that haven’t, and how they have done it in ways that can be measured differently.

But mainly it shows how a fairly innocuous part-privatised but still heavily state-controlled airport operator in Asia Pacific, located in a country that until recently has been under the cosh from the pandemic (and arguably still is), can be – at least by one measure – the most highly significant one in the world.

A research report into current/potential M&A opportunities in the airport sector has just been published by CAPA: CAPA reveals Airport Merger & Acquisition Opportunities in new report.

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