Beijing Airport target price raised on US-China deal - Macquarie
Beijing (XFN-ASIA) - Macquarie Securities said it has raised
its target price on Beijing Capital International Airport to 9.9 hkd from 7.7
hkd on a better long-term growth outlook following last week's signing of the
new China-US air rights agreement.
The new agreement between the US and China should see a doubling of passenger flights between the two countries over the next five years and unlimited air cargo traffic in 2011.
While the near-term earnings impact of the deal will be small -- China-US flights only make up one pct of total aircraft movement at Beijing Airport -- the gradual relaxation of air rights between the two countries could lead to a full "open-sky" agreement within five years, Macquarie said in a client note.
The raised target price also reflects an adjustment for a lower dilution impact from the company's planned A-share issue in the second half this year.
Macquarie said it has increased its assumption of the issue price of Beijing Capital A-shares to 7.0 hkd from 5.0 hkd a share, given the company's recent share price performance.
The original issue size of 800 mln shares was based on a minimum price of 5.0 hkd a share, but Macquarie said it now assumes the issue size will be reduced to 571 mln shares but at a higher issue price of 7.0 hkd a share.
The brokerage said it expects the issuance to take place in the third quarter.
It added that it is maintaining its "outperform" rating on Beijing Capital Airport.