2Q16 results slightly ahead on lower than expected depreciation costs
​Transfer coverage with a BUY rating: Shanghai Int’l Airport’s (SIA) location is the gateway to the biggest metropolis in China. It is well positioned to capture increasingly strong demand for air travel, arising from China’s growing economy and supported by Disneyland as well as tight capacity at Hongqiao Int’l Airport. In addition, we expect the company’s aero-related revenue to grow faster than flight movement/passenger traffic this year given faster growth in international flights, while the benefits of T1 renovation will also lead to decent non-aero sales growth. However, we view SIA’s earnings outlook as more capacity driven, and its on-time performance is the key to watch as it may lead to further lifting the cap in peak-hour flight movements. Our TP is based on the average of a 2017F P/E of 22x and a 2017F P/B of 2.4x.
Shanghai International Airport is engaged in the provision of ground handling services for domestic and international airline transportation enterprises and tourists. Co.'s approved operation scopes include leasing airline business space, commercial space and office space inside the airport; domestic trading; advertising; acting as a shipping and forwarding agent, declaration and examination agent; operation of other businesses related to airline transportation; and comprehensive development; and operation of other investment projects allowed by government policies.
Yuanta is a Taiwan-headquartered brokerage with a growing presence in Asia, especially across Greater China. Our team of 140+ provides cutting-edge analysis on key sectors, spread across offices in Taiwan, Hong Kong, Shanghai (A-Share), Seoul and Jakarta. With an ever-expanding coverage universe of 400+ companies, we provide in depth analysis with unique local color to investors. Consistently being voted the Best Investment Consulting Firm in Taiwan in the AsiaMoney broker poll is evidence of our strength. We target providing an extensive range of research, from small, to mid-sized, to large cap. We bring you the big, well-covered names, as well as going off the beaten track to research the less-familiar companies.
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