FSSIA Expects AAV to Dominate the Market, Seeing Bt0.30/Share Net Gain after Cap Increase

Mr. Suwat Sinsadok, Managing Director of FSS International Investment Advisory (FSSIA), through “Kaohoon Jor Talad Program” on October 20, 2021, stated that Asia Aviation Public Company Limited (AAV) made an excellent move by deciding to increase the capital, which will strengthen its position in the business once the country is fully opened.

Read More: AAV Announces the Capital Increase of 8,000Mn Shares

The MD pointed out that due to the state of Thai Airways International Public Company Limited (THAI) that is unable to inject capital to Thai Smile and Nok Airlines Public Company Limited (NOK) with prolonged financial problem, players in the aviation business will be minimized to mainly AAV, Bangkok Airways Public Company Limited (BA) and Vietjet Air once the reopening start.

Following the allocation of the newly issued ordinary shares at a ratio of 5.7625 existing shares to 1 newly issued ordinary shares, Mr. Sinsadok expected existing shareholders to net gain Bt0.20-0.30 per share from this capital increase after the dilution around 20-30%.

Mr. Sinsadok concluded that investors tend to have a negative view on capital increase, but the move by AAV is the right action prior to the reopening, which will allow the company to gain market share and dominate the market against weak THAI and NOK.

After the capital increase, Mr. Sinsadok expected net profit to return for AAV, coupled with lower interest while debt would decrease around 4,000 million baht. Moreover, AAV will be at an advantage from higher operation capacity that the company received from taking vacant spots in the airport, especially Suvarnabhumi Airport, left by Thai Smile and Nok Air during Covid-19 crisis. He believed that the share price would surge, giving a target price at Bt3.20 per share.

 

In addition to the recovery in aviation, FSSIA’s MD expected Bangkok Aviation Fuel Services Public Company Limited (BAFS) to also benefit from the recovery of airline business. He expected the share price to return to more than Bt40.00 per share and possibly to a new high from its new income channels such as the major oil pipeline to Lampang and its solar farms.