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AST - Key Beneficiary from the Fast Growing Aviation Market

“Taseco Airs (HSX: AST) is one of the largest companies operating in the non-aeronautical business at five major international airports in Vietnam. The company covers a range of services for air passengers. Thanks to strong growth of air passengers, backed by the Government’s support for infrastructure improvements in the tourism sector, airport retailers will be the main beneficiaries. AST owns a network of more than 70 point-of-sale under the Lucky brandname, with dominant position in Noi Bai and Da Nang airport. This segment has shown an impressive growth in recent years, and we expect that the company can even improve its performance because of new store openings in 2018.

VinaCS, AST’s affiliate in catering services, is also poised to benefit as demand for air meals is soaring in-line with demand for air travel. We estimate that the affiliate will contribute to earnings from 2019 onwards.

For the hotel segment, A la Carte Da Nang has been providing stable cash flow for AST. We see the new project 5-star A la Carte Ha Long as the driver for earnings growth when the hotel becomes operational in 2020.

We project AST’s NPAT at approximately VND 160 billion (+9% YoY). Excluding the one-off profit from selling land in 2017, core business NPAT’s growth is 28%. Forecasted EPS for 2018 is VND 4,235. Using the DCF and PE method, we estimate the fair value of AST at around VND 97,000. Adding VND 2,000 in dividend, total return should be 21%. Therefore, we recommend investor BUY the stock.