AOT Plunges 2.26%! Not Enough Sentiment from an Extension of King Power’s Duty-Free?

On May 31, 2019, Airports of Thailand Public Company Limited (AOT) will open the proposal letter containing the bidding price for Suvarnabhumi Airport Duty-Free concession in the morning and commercial area of Suvarnabhumi Airport concession in the afternoon.

Late morning, AOT has announced that “King Power” has won the right to operate the Duty-Free concession in Suvarnabhumi Airport from September 28, 2020 to March 31, 2031. Thus, AOT will proceed to negotiate before submitting to its Board of Directors on June 19, 2019.

It is believed that the consortium of Lotte and Bangkok Airways Public Company Limited (BA) is the runner-up and the consortium of Royal Orchid Hotel (Thailand) Public Company Limited (ROH), Empire Asia Group Company Limited and WDFG UK Limited.

Moreover, the current TOR stated that the Duty-Free concession in Suvarnabhumi Airport has 20% revenue sharing per year to AOT while the commercial area concession has 15% revenue sharing.

Meanwhile, analysts estimated that the revenue sharing for this Duty-Free concession that King Power had just won the bidding could be as high as 40%, which will give a significant increase to AOT’s revenue in the future.

However, the share price of AOT does not seem to move in the same direction as investors had anticipated. AOT closed the morning session at ฿65.00/share, plunged ฿1.50/share or 2.26% with a trading value of THB 2.2 billion.

The plummet might be due to the fact that although King Power proposed higher minimum guarantee, the revenue sharing remained the same, which was the opposite of the analysis. Furthermore, there has been a report that the 2019 profit of AOT could be increased by 5%, missing the expectation of 10% growth from the decrease of Chinese tourists.