Morgan Stanley

Morgan Stanley has revaluated and downgraded AOT’s target price from an outperform rating at ฿97/share to equal-weight rating at ฿69/share due to its lack of near-term growth. The downgrade has come after the number of tourist in August was released from the Ministry of Tourism and Sports. The sudden change in target price has been led by the Phuket Boat Tragedy in July, causing a cancellation of roughly 670,000 Chinese tourists. The data from the Ministry of Tourism and Sports shows that in June, before the ferry incident in Phuket, 900,665 Chinese tourists had visited Thailand, which is 18.12% increase YOY, but the number had decreased since the incident. In July, the number decreased by 0.87% YOY, and 11.77% in August YOY. What is even worse is that there are likely to be no rebound in the number of Chinese tourists in the first week of October, which is the Golden Week in China and Thailand has been one of the top destinations for Chinese tourists during this period. The slowdown in international passenger traffic also causes AOT to stumble. There was a total of 11,728,815 passengers in August 2018, only 2.88% increase YOY. On the other side, Morgan Stanley still has a positive outlook for AOT’s long-term growth potential from 1) Duty-free contract. 2) Potential of passenger service charge hike. 3) A mixed commercial development. The upcoming factors that could cause a near-term change would be the concession of duty-free bidding at the end of this year, and a recovery in Chinese tourists.