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Analyst Pin-board AST – Quarterly earnings to turn positive after two years of the pandemic

• The robust recovery of domestic air passenger has bolstered core earnings in Q2-2022, which is expected reach VND 10 Bn.
• Ramping up operation in international terminals, amid recovering international pax, should provide stronger earnings in 2H-2022.
• While we believe that the recovery of airports’ passenger traffic will boost earnings prospect going forward, current valuation is still unjustified with 2022F P/E (assuming that the company meets profit guidance) of 103x.

Q2-2022 earnings to turn positive on the back of strong air passenger traffic recovery

AST’s revenue started to pick up in Q1-2022 as the company reopened most of their stores amid growing air passenger volume. Currently, 80/111 stores are operating normally, in which fast food and souvenir stores respectively stand at 20 and 60. By location, 100% stores located in domestic terminals are fully reopened, while point-of-sales in international terminals are still 40% below full capacity.

Per CAAV, the total passenger volume, in 6M 2022, reached 23.3 million passengers, up 74.2% YoY and equals to 60% compared to the same period in 2019, of which the domestic volume reached 20.8 million travelers, up 58.4% YoY and equals 112% over the same period in 2019. The domestic market started to remarkably jump since April 2022 and kept its strong momentum in June 2022. The domestic traffic in June 2022 reached 5 million pax, up 20.9% MoM and even 38.8% higher compared to June 2019 (the peak summer month in pre-covid period). The seat occupancy rate on domestic routes in June 2022 is very high, ranging from 85% to 87%.

Given the complete recovery and strong growth of domestic market in Q2-2022, the company estimates that sales and PBT in this quarter will reach VND 130 bn (+158% YoY and +92% QoQ) and VND 14 bn, respectively.