Asia Pacific Airports_ Airport Renewal Tracker

Summary of the Conference Call on Asia Pacific Airports Industry Overview - The Asia Pacific airport sector is experiencing a patchy recovery influenced by divergent economies, capacity constraints, and policy decisions, particularly regarding China's reopening [2][39]. - The proprietary AlphaWise Airport Revival Tracker has been updated to reflect these dynamics [2]. Key Insights by Region China - International capacity has reached 78% of the 2019 level, while domestic flights are at 96% of 2019 levels [2]. - Earnings recovery for Chinese airports is expected to be pressured by soft consumption, although this is largely priced in [2]. - A preference for Guangzhou Baiyun International Airport (GBIA) is noted as a defensive investment due to lower exposure to duty-free business and higher dividend yield [2]. Japan - The Japan National Tourism Organization (JNTO) data for January 2025 indicates an annual demand of approximately 45 million, which is positive for air transport and hotel industries [3]. Thailand - Airports of Thailand (AOT) reported international traffic recovery to 95% of pre-COVID levels, but there are concerns over increased receivables from duty-free operators, amounting to Bt15 billion [4]. - Risks related to concession renegotiations are highlighted, with market reactions potentially overestimating the impact on concession revenues [4]. Oceania - Auckland International Airport (AIA) is seeing flat international passenger numbers compared to 2019, with a slight decline projected for March 2025 [5]. - AIA is awaiting a final decision on Price Setting Event 4 (PSE4) which could impact its weighted average cost of capital (WACC) [5]. Investment Ratings and Catalysts - Investment ratings for various airports include: - JAT (Tokyo International Airport): Overweight - GBIA (Guangzhou Airport): Overweight - AOT (Airports of Thailand): Overweight - AIA (Auckland Airport): Equal-Weight - SIAC (Shanghai International Airport): Overweight - BCIA (Beijing Capital International Airport): Equal-Weight [36]. - Near-term catalysts for these airports include: - Traffic recovery and growth in duty-free consumption for HMIA (Hainan Meilan International Airport) [37]. - Monthly passenger data and trends from the nationwide travel subsidy program for JAT [37]. - Domestic and international traffic recovery for AOT [37]. Market Dynamics - The recovery in air travel is heterogeneous, with shifts in market share expected as travel resumes [39]. - The AlphaWise Airport Revival Tracker provides insights into seat capacity changes, which are critical for forecasting passenger numbers [40][57]. Additional Observations - The data indicates that while some airports are recovering well, others are still facing challenges, particularly in China and Thailand [45]. - The overall sentiment in the Asia Pacific airport sector remains cautious but optimistic, with a focus on monitoring key metrics and catalysts for investment decisions [2][39]. This summary encapsulates the key points from the conference call regarding the Asia Pacific airport industry, highlighting regional performance, investment opportunities, and market dynamics.