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ACV - Seizing the Opportunities for Growth

“Airport Corporation of Vietnam (ACV-Upcom) operates 22 commercial airports across Vietnam. The firm’s business growth has been driven by the rise of incomes in Vietnam, increasingly affordable air travel expenses, and Vietnam’s deeper global economic integration. As Vietnam’s economy is still in its emerging state, we expect air traveler volume to continue growing at 15-20% in the coming years. Expansion at major airports (Tan Son Nhat, NoiBai, Da Nang and Phu Quoc) will add 23% passenger capacity between 2016-2018 and relieve the current state of under capacity. Since fixed costs make up the majority of airport operations, ACV’s recent increased service charges proposal would have a positive impact on the firm’s earnings if approved.

ACV’s growth prospects and profitability have room to improve thanks to (1) the rise of Vietnam’s middle class (2) relatively unexploited non-aeronautical services yielding high profit margins in relative to regional peers and (3) more effective fund raising and better expansion project execution after ACV had its IPO. Moreover, mega LongThanh International Airport Project is another major development in the future.

We believe that the current share price largely reflects investor’s short-term expectations regarding ACV’s earnings results. However, ACV is well positioned to strongly benefit from explosive growth in air travelers in the coming years. We recommend investors to BUY ACV’s stock, and have set a 2-year target price of 67,000 VND/share (36% upside potential).”​