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ATHENS INTERNATIONAL AIRPORT (AIA) | Fresh impetus to the thesis but re-rating window narrowing

Higher 2024 return, accelerated expansion plan… – AIA’s FY’24 results eclipsed estimates mainly driven by the faster depletion of the carry-forward balance (which is non-recurring in nature) and better-than envisaged unit commercial revenues. The key development though was the announcement for the acceleration of the expansion plan (merger of the 33-40MAP capex phases with an accelerated pax target timeline) partly funded by a scrip dividend (€240m over 4 years). The latter will have 3 key consequences: 1) it will increase the regulatory equity base by >40%, thus translating to c17% uplift to “normalized” group net profit (upon full effect) as a result of the higher returns of the air segment (15% regulatory ROE); 2) scope for higher profitability for the non-air segment, stemming from the earlier development of the commercial space and the earlier delivery of interim capacity increments; 3) commercial and cost synergies from the combination of the two phases.

… driving 2026e-onward numbers higher – We have raised our 2026e by some €30-40m, as a result of the incorporation of the increased equity base (related to the scrip dividend) into regulatory equity. Looking further out, this is further augmented by higher commercial revenues in the medium term as a result of the earlier delivery and increased size of commercial space thanks to the accelerated investment program. For 2025e, we make more trivial changes capping regulated returns at 15%. With the company having consumed a greater part of the under-recovered prior year returns during 2024, less is left for consumption in 2025, and, as a result, our 2025 net profit estimates are adjusted downward by c2% relative to our prior numbers. Our new 2025-26e net profit projection lands broadly in line with mgt guidance of c€200m.

Near-term outlook remains subdued as air activity profits “normalize”; c5% net profit CAGR over 2027e-2035e – As we had argued in our initiation report, the abnormally high returns over 2022-25e mean that the profit outlook to 2027e is negative (contrary to the case for most international airports). We estimate adj. EBITDA will settle down to €400-410m in 2025-26e, below the 2024 figure (€425m), rising to ≥€430m from 2027e as non-air profits ramp up (following the completion of AIA’s multi-storey parking in Q2 2027e) and on improving mix. Post normalization of profitability in 2025e – after the depletion of the carry forward balance – air activities are poised to grow at c4% on our estimates (i.e. inflation + boost from higher regulatory equity following the scrip dividend program + expansion) while non-air is set for c5.5% growth between 2028e and 2035e. These add up to group net profit CAGR of c5% over 2027-2035e.

Valuation – The shares have enjoyed revived momentum since Oct’24, supported by the high cash returns (€0.78 DPS, 8.6% yield at spot price) and better-than expected 2024 results, with further momentum being unleashed by the accelerated capex plan announcement. Following the c10% increase to our med-term EBITDA, we have lifted our PT to €9.7 (combination of DDM/DCF). We maintain our Hold as we believe that the current valuation, at c9.6x 2026e EV/EBITDA (fully normalized air profits) already reflects the merits of the thesis (benign regulation, high yielding & prime asset), with the stock trading in sync with its EU peers.