On Wednesday, UBS upgraded shares of Airports of Thailand PCL (AOT:TB) (OTC: AIPUY), shifting its rating from Sell to Buy and raising its price target to THB64.75 from THB54.00. The adjustment comes after a reassessment of the company's earnings potential, now more closely linked to international traveler movements due to changes in duty-free concession terms.
The firm highlighted that the anticipated increase in tourist arrivals to Thailand significantly influences the forecast for Airports of Thailand's earnings. The company's valuation, which stood at 30 times 12-month forward EV/EBITDA during 2018-2019, has now decreased to 22 times, attributed to the current concerns over a subdued tourism outlook and substantial capital expenditures.
Despite these challenges, UBS expressed a positive outlook, citing an expected surge in tourist numbers to 50 million by 2030. This projection is reflected in the new price target, which is based on 25 times the estimated 2025 EV/EBITDA.
Airports of Thailand's stock valuation is perceived as overly pessimistic by UBS, considering the company's similar earnings growth and return on invested capital (ROIC) to past years. The firm's reassessment positions Airports of Thailand as their top pick in the sector, indicating a strong conviction in the stock's future performance.
InvestingPro Insights
Recent data from InvestingPro adds weight to UBS's optimistic outlook on Airports of Thailand PCL (AIPUY). The company's impressive revenue growth of 67.25% over the last twelve months, coupled with a strong EBITDA growth of 126.42% during the same period, suggests a robust recovery in the aviation sector and aligns with the anticipated increase in tourist arrivals.
InvestingPro Tips highlight that Airports of Thailand has a perfect Piotroski Score of 9, indicating strong financial health and operational efficiency. This score, combined with the company's impressive gross profit margins, supports UBS's view of the company's earnings potential and its ability to capitalize on the projected surge in tourism.
The stock's recent performance is noteworthy, with a 31.03% price total return over the past three months. This aligns with UBS's upgrade and suggests that the market may be beginning to recognize the company's growth potential.
For investors seeking a deeper understanding of Airports of Thailand's prospects, InvestingPro offers 15 additional tips, providing a comprehensive analysis of the company's financial position and market outlook.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.