(nok tb) buy market cap: usd527.3m price: thb26...ipo note, 19 june 2013 nok airlines (nok tb) buy...
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IPO Note, 19 June 2013
Nok Airlines (NOK TB) BuyConsumer Cyclical - Airlines Target Price: THB37.6
Market Cap: USD527.3m Price: THB26.0
ไดเวลานกโบยบิน
Macro
Risks
Growth
Value
Newly Issued Shar 125m shares (20%)
Existing Share* 62.5m shares (10%)
Total 187.5m shares (30%)
Paid Up Capital THB625m (at THB1 per share)
Use of Proceeds: Aircraft procurement and working capital purposes
Source: Bloomberg
Avg Turnover (THB/USD) -
Cons. Upside (%) -
Upside (%) -
52-wk Price low/high (THB) -
Free float (%) 30
Shareholders (%)
Thai Airways International 39.2
Aviation Investment 10.0
CPB Equity 4.8
Shariah compliant
Thailand Research Team. +66 (0) 2 862 9999 Ext.2030
Forecasts and Valuations Dec-11 Dec-12 Dec-13F Dec-14F Dec-15F
Total turnover (THBm) 6,039 8,218 11,719 15,272 19,498
Net income to ord equity (THBm) 200 505 1,413 1,801 2,536
Recurring net profit (THBm) 198 760 1,413 1,801 2,536
Recurring net profit growth (%) (67.3) 284.5 85.9 27.4 40.8
Core EPS (THB) 0.40 1.52 2.26 2.88 4.06
DPS (THB) 0.23 1.10 1.13 1.44 2.03
Dividend Yield (%) 0.9 4.2 4.3 5.5 7.8
Core P/E (x) 65.8 17.1 11.5 9.0 6.4
Return on average equity (%) 26.0 59.9 46.0 27.7 26.8
P/B (x) 16.30 14.64 3.09 2.09 1.45
P/CF (x) 40.56 15.41 10.23 8.47 5.93
EV/EBITDA (x) 49.83 18.59 6.45 4.05 2.12
Net debt to equity (%) net cash net cash net cash net cash net cash
Ours vs consensus EPS (%) - - -
Source: Company data, RHB Estimates
เราประเมินมูลคาหุนบริษัท นกแอร จํากัด (NOKAIR จะจดทะเบียนในวันท่ี 20 มิถุนายน) ท่ีราคา 37.6 บาทอิงจาก EV/EBITDAR ท่ี 7.5x เรายังคงชื่นชอบลักษณะการเติบโตของประเทศไทยท้ังในแงรายไดตอหัวประชากรท่ีเพ่ิมขึ้นและการเจริญเติบโตอยางรวมเร็วของความเปนเมือง (urbanization) ชวยหนุนการเติบโตของธุรกิจทางอากาศและเพ่ิมโอกาสใหบริษัทไดขยายฐานกองบิน ท้ังนี้ คาดวากําไรจากการดําเนินการจะเติบโตโดดเดนถึง 86% ภายในป 2556 (อัตราการเติบโตของกําไร CAGR 3 ปเทากับ 50%) จากการเพิ่มกองบินทําใหเกิดการประหยัดทางดานตนทุน (economies of scale)
ปจจัยหนุนการเติบโต เรายังคงช่ืนชอบลักษณะการเติบโตของประเทศไทยท้ังในแงรายไดตอหัวประชากรท่ีเพ่ิมขึ้นและการเจริญเติบโตอยางรวมเร็วของความเปนเมือง (urbanization) ชวยหนุนการเติบโตของธุรกิจทางอากาศและเพ่ิมโอกาสใหบริษัทไดขยายฐานกองบิน นอกจากนั้น ต้ังแตสายการบินแอรเอเชีย (“ซ้ือ” ราคาเปาหมาย 3.39 ริงกิต) ยายฐานปฏิบัติการบินมาสูทาอากาศยานสุวรรณภูมิ ทําใหสายการบินนกแอรไดรับประโยชนจากเสนทางตอของเคร่ืองบินไปยังจังหวัดเทียร 2-3 (Tier 2-3) มากยิ่งขึ้นซ่ึงบริษัทเปนผูเลนรายใหญเพียงรายเดียวในสายการบินโลวคอสท ซ่ึงเรามองวาเสนทางดังกลาวยังคงสามารถเติบโตไดดีอยางตอเนื่องหนุนให load factor ของสายการบินสามารถเพ่ิมขึ้นไดในอนาคต อัตราการเติบโตโดดเดน คาดวารายไดของสายการบินสามารถเติบโตไดอยางตํ่าราว 43%/30%/28% ในป2556-58 ตามลําดับ โดยไดรับอานิงสจากอัตราการใหบริการท่ีเพ่ิมขึ้นจากท้ังการสงมอบเคร่ืองบินใหมและระบบบริหารจัดการท่ีนั่งอยางเหมาะสม รวมท้ังการเปดเสนทางใหมๆ นอกจากนั้น จากสมมุติฐานตนทุนตอเคร่ืองท่ีลดลงจากการบริหารจัดการท่ีมีประสิทธิภาพและการประหยัดดานตนทุน ทําใหบริษัทสามารถท่ีจะมีการเติบโตทางกําไรไดมากถึง 86% (y-o-y) ในป 2556 และดวยการสงมอบเคร่ืองบินใหมๆอยางตอเนื่องจะชวยหนุนกําไรในรอบป 2557/58 เติบโตได 27% และ 41% ตามลําดับหนุนคาดการณกําไรจากการดําเนินการในรอบ 3 ปขางหนาเติบโตไดถึง 49% (y-o-y) ประเมินราคาเปาหมาย
เราประเมินราคาเปาหมายของหุน NOKAIR ท่ีราคา 37.6 บาทอิงจาก EV/EBITDAR ป2557 ท่ี 7.5x ซ่ึงใชคา P/E มรา 13.1x และ EV/EBITDA ท่ี 7.1x ซ่ึงตํ่ากวาสายการบินตนทุนตํ่าในแถบเอเชียรายอ่ืนท่ีมีคา EV/EBITDA ราว 7.4x นอกจากนั้นดวยสมมุติฐานกําไร (CAGR ป 2556-58) ท่ี 49% (PEG 0.3x) สะทอนใหเห็นมูลคาการประเมินท่ีถูกกวาสายการบินรายอ่ืนท่ีมีคาเฉล่ีย PEG ท่ี 0.6x
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 2
Executive Summary
วิธีการประเมิน
เราประเมินมูลคาราคาเปาหมายหุน NOKAIR เทากับ 37.6 บาทอิงจาก adjusted EV ในป 2557 และ EBITDAR (กําไรกอนหักดอกเบ้ีย ภาษี คาเส่ือมราคา และคาเชา) ท่ี 7.5x สะทอนใหเห็นมูลคา EV/EBITDA และ P/E ในรอบป 2557 ท่ี 7.1x และ 13.1x ตามลําดับ
ท้ังนี้ มูลคาหุนนกแอรยังคงตํ่ากวาผูประกอบการสายการบินโลวคอทภูมิภาครายอ่ืนราว 45% โดยอิงจากคา EV/EBITDA ท่ี 4.05x เทียบกับ EV/EBITDA ป 2557 ของสายการบินโลวคอทรายอ่ืนท่ี 7.4x และสมมุติฐานคาดการณการเติบโตของกําไรในรอบป 2556-58 (CAGR) ท่ี 49% หรือสะทอนมูลคา PEG ท่ี 0.3x ซ่ึงตํ่ากวาคาเฉล่ีย PEG ของสายการบินอ่ืนท่ี 0.6x ถึง 50% เราจึงแนะนํานักลงทุนเขาทําการซ้ือหุนนี้
Figure 1: Nok Air’s valuation Capitalized Fleet Value (x 8 years) - THBm 16,766.1 Less: Net Cash - THBm 6,801.8 Net Capitalized Fleet - THBm 9,964.3 Adjusted EV/EBITDAR multiple applied (x) 7.5 x: FY14 EBITDAR - THBm × 4,463.5 Adjusted EV - THBm 33,475.9 Less: Net Capitalized Fleet - THBm � 9,964.3 Market Cap value - THBm 23,511.6 Divided by: Number of Shares - m ÷ 625.0 FV per share - THB 37.6 Implied FY14 P/E (x) 13.1 Implied FY14 EV/EBITDA (x) 7.1 Implied FY13 PEG (X) 0.3
Source: RHB estimates
Figure 2: A peer comparison Last Market Cap FY01 FY02 FY01 FY02 FY02 Best PEG
Price (USD m) P/E (x) P/E (x) EV/EBITDA (x) EV/EBITDA (x) P/BV (x) ROE (%) (x)
Airasia Bhd AIRA MK 3.16 2780.3 10.5 10.4 7.6 7.1 1.3 10.6 0.9
Asia Aviation AAV TB 5.5 865.3 16.6 13.6 11.2 9.0 1.3 8.4 0.6
Tiger Airways Holdings Ltd TGR SP 0.63 488.7 12.5 10.4 10.6 7.8 1.5 22.0 -
Cebu Air Inc CEB PM 75.2 1053.9 12.7 10.1 7.9 6.7 1.8 15.9 0.4
Jet Airways India Ltd JETIN IN 478 702.7 30.9 9.5 7.3 6.4 25.5 13.7 -
Average Asia LCCs 16.6 10.8 8.9 7.4 6.3 14.1 0.6
Southwest Airlines Co LUV US 13.8 9953.3 13.4 11.2 4.4 4.0 1.3 9.2 0.7
Air Arabia AIRARABI DB 1.13 1435.7 11.8 9.8 8.5 6.7 0.9 8.4 -
Ryanair Holdings Plc RYA ID 6.87 13086.6 15.7 13.5 8.6 7.7 2.6 17.2 1.2
Allegiant Travel Co ALGT US 102 1950.4 18.9 16.1 7.2 6.1 4.1 21.8 1.6
Vueling Airlines Sa VLG SM 9.19 367.7 8.7 8.5 - - 1.0 9.8 -
Norwegian Air Shuttle As NAS NO 274 1672.4 11.1 8.6 6.4 5.3 2.9 28.9 -
Aer Linghus Group AERL ID 1.61 1141.8 13.6 11.2 4.2 3.8 1.0 6.9 -
Easyjet Plc EZJ LN 1288 7977.8 15.4 13.9 8.2 7.5 2.5 17.4 1.1
Jetblue Airways Corp JBLU US 6.31 1780.2 12.3 9.1 5.3 4.4 0.9 7.8 0.8
Gol Linhas Aereas Intel-Adr GOL US 3.99 1112.7 - 21.8 - - 2.7 3.0 -
Westjet Airlines Ltd WJA CN 22.2 2885.1 10.7 9.6 3.7 3.4 1.8 17.9 0.6
Average All 14.3 11.7 7.2 6.1 3.3 13.7 0.9
Nok Air NOK TB 527.3 11.5 9.0 6.5 4.1 3.1 46.0 0.2
31% 16% 28% 45% 51% -226% 63%Discount / (Premium) to Average Asia LCCs
Source: RHB estimates, Bloomberg
*Last price as of 18 June 2013 at respective local currencies
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 3
ประเด็นอื่นๆท่ีสําคัญ
นโยบายการจายปนผลท่ีมั่นคง
จาก passenger yield ท่ีสูงและความสามารถในการลดตนทุนในอนาคตจากการพัฒนากองบินเรามองวาบริษัทจะสามารถจายปนผลไดอยางมั่นคง โดยในรอบสองปท่ีผานมา ไดมีการจายปนผลในอัตรา 50% ของกําไรสุทธิ คาดวามูลคาปนผลในรอบป 2556/57/58 จะเทากับ 1.13/1.47/2.03 บาท นอกจากนั้น ราคาหุน IPO ท่ี 26 บาทสะทอนใหเห็นสมมุติฐานการจายปนผลท่ี 4.3%/5.5%/7.8% ในรอบป 2556/57/58 ตามลําดับ แผนการลงทุน
จากการออกขายหุนเปนคร้ังแรกคาดวาจะสามารถระดมเงินไดราว 3.25 พันลานบาทซ่ึงบริษัทจะใชในการซื้อและวางมัดจําในการซ้ือกองบินใหม รวมท้ังเพ่ือการลงทุนในการดําเนินงานท่ัวไป โดยขณะนี้บริษัทไดใชกลยุทธ “asset light strategy” กลาวคือไดเชาเคร่ืองบินจากภายนอกท้ังหมดในขณะนี้ 17 ลํา และดวยกลยุทธการระดมทุนจากการขายหุนคร้ังนี้ จะทําใหนกแอรสามารถท่ีจะดําเนินการเคร่ืองบินเทอรโบ (turbo prop) ไดอีก 8 ลําเพ่ิมภายในป 2558 ซ่ึงมาจากการซื้อเองโดยตรงจํานวน 6 ลําและสัญญาเชาเคร่ืองอีก 2 ลํา ท้ังนี้ ในระยะยาว ยังมีแผนจะซ้ือเคร่ืองบิน Boeing Max เพ่ือสรางความแข็งแกรงใหกับกองบินจากตนทุนการกูยืมท่ีตํ่า และจะสงผลดีตอบริษัทในดานของประโยชนดานการหักคาใชจายภาษีและตนทุนคาเชาและซอมบํารุงท่ีลดลง ดังนั้น เราคาดวาคาใชจายในการลงทุนในรอบ 3 ปขางหนาจะเปนไปตามคาดการณท่ี 5.5 พันลานบาท ซ่ึงเปนจํานวนเงินท่ีมจีากการขายหุน IPO ปจจัยหนุนการเติบโต
เรายังคงช่ืนชอบลักษณะการเติบโตของประเทศไทยท้ังในแงรายไดตอหัวประชากรท่ีเพ่ิมขึ้นและการเจริญเติบโตอยางรวมเร็วของความเปนเมอืง (urbanization) ชวยหนุนการเติบโตของธุรกิจทางอากาศและเพ่ิมโอกาสใหบริษัทไดขยายฐานกองบิน นอกจากนั้น ต้ังแตสายการบินแอรเอเชีย (“ซ้ือ” ราคาเปาหมาย 3.39 ริงกิต) ยายฐานปฏิบัติการบินมาสูทาอากาศยานสุวรรณภูมิ ทําใหสายการบินนกแอรไดรับประโยชนจากเสนทางตอของเคร่ืองบินไปยังจังหวัดเทียร 2-3 (Tier 2-3) มากยิ่งขึ้นซ่ึงบริษัทเปนผูเลนรายใหญเพียงรายเดียวในสายการบินโลวคอสท ซ่ึงเรามองวาเสนทางดังกลาวยังคงสามารถเติบโตไดดีอยางตอเนื่องหนุนให load factor ของสายการบินสามารถเพ่ิมขึ้นไดในอนาคต อัตราการเติบโตโดดเดน
คาดวารายไดของสายการบินสามารถเติบโตไดอยางตํ่าราว 43%/30%/28% ในป 2556-58 ตามลําดับ โดยไดรับอานิงสจากอัตราการใหบริการท่ีเพ่ิมขึ้นจากท้ังการสงมอบเคร่ืองบินใหมและระบบบริหารจัดการท่ีนั่งอยางเหมาะสม รวมท้ังการเปดเสนทางใหมๆและอัตราการใชสอยท่ีดีขึ้น นอกจากนั้น จากสมมุติฐานตนทุนตอเคร่ืองท่ีลดลงจากการบริหารจัดการท่ีมีประสิทธิภาพและการประหยัดดานตนทุน ทําใหบริษัทสามารถท่ีจะมีการเติบโตทางกําไรไดมากถึง 86% (y-o-y) ในป 2556 และดวยการสงมอบเคร่ืองบินใหมๆอยางตอเนื่องจะชวยหนุนกําไรในรอบป 2557/58 เติบโตได 27.4% และ 41% ตามลําดับ หนุนคาดการณกําไรจากการดําเนินการในรอบ 3 ปขางหนาเติบโตไดถึง 49% (y-o-y) งบดุลแข็งแกรงโดยไมมภีาระหนี้
จากการท่ีบริษัทไมไดกูยืมจากภายนอกและการบริหารงานโดยใชกระแสเงินสดเปนหลักจากกลยุทธ “asset light” ทําใหเพ่ิมความสามารถในการยืมเงินในอนาคตไดมากขึ้นหนุนโอกาสในการขยายกองบินขึ้นในอนาคต เปนผูนําในแงของ yield
สายการบินนกแอรถือวาอยูเปนอันดับท่ีสามในแงของ passenger yield จากสายการบินอ่ืนในอาเซียน โดยไดรับอานิสงสจากเสนทางบินไปยังจังหวัดเทียรท่ี 2-3 ท่ีใหผลตอบแทนท่ีดี นอกจากนั้นมูลคา EBITDAR margin ในรอบป 2555 ยังสูงถึง 22.5% และคาดวาจะเพ่ิมเปน 32.6% ในป 2558 หากบริษัทไดรับประโยชนดานตนทุนจากการขยายฝูงการบิน ซ่ึงขณะนี้สายการบินตนทุนตํ่าท่ีใหญท่ีสุดในเอเชียอยาง AirAsia มี EBITDAR margin (ไมรวมรายไดจากการปลอยเชาเคร่ือง) ในรอบสามปท่ีผานมาอยางนอย 28%
.
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 4
Key Focus Charts
Figure 3: Passenger yield (THB) for Nok Air was high, thanks to its extensive exposure to high-yield feeder routes. Figures as of FY12
Figure 4: Fleet expansion to boost ASK (available seat km) and RPK (revenue passenger km)
3.56
3.49
3.35
3.00
2.82
2.72
2.68
2.61
2.27
2.23
2.21
1.88
0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00
Garuda - Domestic
* Silk Air (FYE Mar 13)
Nok Air
Garuda - All
* Singapore Airlines (FYE Mar 13)
Thai Airways
Garuda - International
Malaysia Airlines
Cebu Air
Thai AirAsia
Malaysia AirAsia
Indonesia AirAsia
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
78%
79%
80%
81%
82%
83%
84%
85%
Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F Dec-15F
ASK (m) - RHS RPK (m) - RHS
Load Factor (%) - LHS
Source: RHB estimates, Company
*To standardize with peers for a meaningful comparison, our calculation on passenger yield is based on all revenues earned from passengers and airline related businesses (inclusive of charter aircraft revenue and ancillary income) divided by total RPK (revenue passenger kilometer)
Source: Company
*RPK: The number of revenue passengers carried times distance in kilometers
*ASK: The number of seats available for the transportation of passengers times distance in kilometers
* Load Factor: RPK divided by ASK and expressed as a percentage. Describes the utilization level of available seats
Figure 5: Improvement in CASK (cost of available seat km) to lower breakeven load factor moving forward
Figure 6: CASK expected to dip on improved economies of scale. Figures as of FY12
66%
68%
70%
72%
74%
76%
78%
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F Dec-15F
Breakeven Load Factor - % Passenger Yield (THB) - LHS
CASK (THB) - LHS
1.32
1.39
1.65
1.83
2.26
2.28
2.44
2.45
2.57
2.59
2.74
0.0 0.5 1.0 1.5 2.0 2.5 3.0
Indonesia AirAsia
Malaysia AirAsia
Thai AirAsia
Cebu Air
Garuda - International
* Singapore Airlines (FY13)
Garuda - All
* Silk Air (FYE Mar 13)
Nok Air
Malaysia Airlines
Garuda - Domestic
Source: Company
* CASK is calculated by totaling all operating expenses related to airline operations divided by the ASK
* Breakeven load factor is the minimum load factor needed to breakeven
Source: RHB estimates, Company
*CASK is calculated by totaling all operating expenses related to airline operations divided by the ASK
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 5
Figure 7: Tourist arrivals
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
-10%
-5%
0%
5%
10%
15%
20%
25%
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Visitor arrivales (RHS) y-o-y% chg (LHS)
Source: CEIC
Figure 8: Tourism receipts (THBm)
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
Tourism receipts (RHS) Y-o-Y % chg (LHS)
Source: CEIC
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 6
Figure 9: Tourist arrivals by nationality & market share Market share
Nationality 2004 2010 2011 2012 y-o-y since '01 since '06 2012
Malaysia 1,404,929 2,058,956 2,500,280 2,560,963 2% 7% 8% 11%
China 729,848 1,122,219 1,721,247 2,789,345 62% 12% 20% 13%
Japan 1,212,213 993,674 1,127,893 1,371,253 22% 1% 1% 6%
Russia 115,064 644,678 1,054,187 1,317,387 25% 32% 38% 6%
Korea 898,965 805,445 1,006,283 1,169,131 16% 8% 1% 5%
India 332,387 760,371 914,971 1,015,865 11% 13% 14% 5%
Laos 111,916 715,345 891,950 951,090 7% 24% 23% 4%
United Kingdom 757,268 810,727 844,972 870,164 3% 3% 0% 4%
Australia 399,291 698,046 829,855 930,599 12% 9% 9% 4%
Singapore 578,027 603,538 682,364 821,056 20% 3% 3% 4%
USA 627,506 611,792 681,748 767,420 13% 3% 2% 3%
Germany 455,170 606,874 619,133 681,566 10% 5% 5% 3%
France 274,049 461,670 515,572 572,996 11% 7% 10% 3%
Vietnam 135,942 380,368 496,768 617,804 24% 24% 18% 3%
Taiwan 540,803 369,220 447,610 394,475 -12% -5% -3% 2%
Hong Kong 489,171 316,476 411,834 472,699 15% 6% 4% 2%
Sweden 224,761 355,214 373,856 350,565 -6% 7% 2% 2%
Indonesia 193,222 286,072 370,795 448,748 21% 9% 13% 2%
Middle East: Others 88,294 281,706 282,433 260,756 -8% 14% 12% 1%
CAGR
Source: CEIC
Figure 10: At a sweet spot
Source: S-A-P
Figure 11: Average monthly wage (THB)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Jan-
02
Jul-0
2
Jan-
03
Jul-0
3
Jan-
04
Jul-0
4
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Average Monthly Wage (THB) % y-o-y change
Source: CEIC
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 7
Figure 12: Shareholding pre-IPO
Asvinvichit, 5% King Power,
5%
SCB, 5%
CPB Equity, 6%
K' Patee, 5%
Aviation Investment,
25%
Thai Airways, 49%
Source: Company
Figure 13: Market share by % of passengers served
41.3% 37.0% 34.9%
17.5% 21.2% 23.7%
24.6% 24.7% 26.6%
16.7% 17.1% 14.8%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
2010 2011 2012
Thai Airways Nok Air AirAsia Others
Source: DCA
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 8
Figure 14: Routes served
Source: Company
Figure 15: Nok Air has the most extensive route and destination coverage
Source: DCA, Ministry of Transportation
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 9
Figure 16: Peers’ comparison of domestic route coverage (number of round trips per week)
266 291 308
196
28
77 28
140
14
14
0
100
200
300
400
500
600
Nok Air AirAsia Thai Airways Bangkok Airways Orient Thai
Primary route Secondary route Feeder route
483
333 308
210
28
Source: DCA
Figure 17: Historical growth of Nok Air’s flight frequency
147
226259 266
39
49
63 77
12
56
126140
0
100
200
300
400
500
600
2010 2011 2012 Present
Feeder route
Secondary route
Primary route
198
331
448483
Source: DCA
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 10
Figure 19: Revenue per pax based on route type (THB)
1800 1794 18311675
1767 1762
25582414
2093
0
500
1000
1500
2000
2500
3000
2010 2011 2012
Primary Secondary Feeder
Source: RHB estimates, Company
Figure 20: Comparison of FY12 passenger yields (THB)
3.56
3.49
3.35
3.00
2.82
2.72
2.68
2.61
2.27
2.23
2.21
1.88
0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00
Garuda - Domestic
* Silk Air (FYE Mar 13)
Nok Air
Garuda - All
* Singapore Airlines (FYE Mar 13)
Thai Airways
Garuda - International
Malaysia Airlines
Cebu Air
Thai AirAsia
Malaysia AirAsia
Indonesia AirAsia
Source: RHB estimates, Company
*To standardize with peers for a meaningful comparison, our calculation on passenger yield is based on all revenues earned from passengers and airline related businesses (inclusive of charter aircraft revenue and ancillary income) divided by total RPK (revenue passenger km)
Figure 18: Projected fleet growth
610
3 3
3
810
1418
22
2
23
4 2
5
8
0
5
10
15
20
25
30
35
2010 2011 2012 1Q2013 2013F 2014F 2015FFleet
ATR
B737-800
B737-400
15 14
1716
23
30
8
Source: Company
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 11
Figure 21: Passenger yields and revenue per available seat km (RASK) (THB)
3.36 3.36 3.32 3.353.16
3.30 3.30 3.31
2.77 2.69 2.74 2.82 2.77 2.74 2.71 2.72
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
FY10 FY11 1QFY12 FY12 1QFY13 FY13f FY14f FY15f
Passenger Yield RASK
Source: RHB estimates, Company
* Our calculation on Passenger yield is based on all revenues earned from passengers and airline related businesses (inclusive of charter aircraft revenue and ancillary income) divided by total RPK (revenue passenger km)
* RASK is calculated based on all revenues earned from passengers and airline related businesses (inclusive of charter aircraft revenue and ancillary income) divided by total ASK (available seat km)
Figure 22: Cost per available seat km (CASK)
2.36
2.572.74
2.57
2.36 2.34 2.34 2.31
1.59 1.571.72 1.64
1.52 1.45 1.43 1.41
0
0.5
1
1.5
2
2.5
3
FY10 FY11 1QFY12 FY12 1QFY13 FY13f FY14f FY15f
CASK CASK (ex fuel)
Source: RHB estimates
*CASK is calculated by totaling all operating expenses related to airline operations divided by the ASK
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 12
Figure 23: FY12 CASK comparison against peers
1.32
1.39
1.65
1.83
2.26
2.28
2.44
2.45
2.57
2.59
2.74
0 0.5 1 1.5 2 2.5 3
Indonesia AirAsia
Malaysia AirAsia
Thai AirAsia
Cebu Air
Garuda - International
* Singapore Airlines (FY13)
Garuda - All
* Silk Air (FYE Mar 13)
Nok Air
Malaysia Airlines
Garuda - Domestic
Source: RHB estimates
* CASK is calculated by totaling all operating expenses related to airline operations divided by the ASK
Figure 24: FY12 breakeven load factor comparison against peers
99%
84%
81%
81%
81%
77%
77%
74%
70%
70%
63%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Malaysia Airlines
Garuda - International
Garuda - All
Cebu Air
* Singapore Airlines (FY13)
Garuda - Domestic
Nok Air
Thai AirAsia
Indonesia AirAsia
* Silk Air (FYE Mar 13)
Malaysia AirAsia
Source: RHB estimates
* Breakeven load factor is the minimum load factor needed to break even
Figure 25 Historical dividend track record and potential future payout FY10 FY11 FY12 FY13F FY14F FY15F
Special dividends declared for the year (THBm) 0 0 300 0 0 0
Final Dividends declared for the year (THBm) 100 114 250 707 900 1268
Actual cash payment out (THBm) 0 100 414 250 707 900
Payout (%) 17% 57% 109% 50% 50% 50%
DPS based on post IPO share base (THB) 0.16 0.18 0.88 1.13 1.44 2.03
Dividend Yield % (at THB26 IPO price) 0.6 0.7 3.4 4.3 5.5 7.8
Source: RHB estimates, Company
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 13
Figure 26: Operating metrics and 1Q results table Operating Metrics 1QFY12 1QFY13 Y-o-Y FY12 FY13f Y-o-Y 1Q/FY13f (%)ASK (m) 681.1 1014.3 49% 2915.7 4282.3 47% 24% RPK (m) 563.1 888.6 58% 2455.8 3554.3 45% 25% Load Factor (%) 82.7 87.6 4.93 84.2 83.0 -1.23 Pax Yield (Rev/RPK) 3.32 3.16 -5% 3.35 3.30 -1% 96% RASK (Rev/ASK) 2.74 2.77 1% 2.82 2.74 -3% 101% Income Statement 1QFY12 1QFY13 Y-o-Y FY12 FY13f Y-o-Y 1Q/FY13f (%)Revenue 1,868 2,811 50% 8,218 11,719 43% 24% Other operating expenses except fuel 1,174 1,541 31% 4,795 6,219 30% 25% Operating expenses (incl. fuel) 1,868 2,394 28% 7,486 10,009 34% 24% Profit from operations before cost of fuel 694 1,270 83% 3,423 5,500 61% 23% Cost of fuel 694 853 23% 2,692 3,791 41% 22% EBITDAR 240 791 230% 1,853 3,166 71% 25% Operating Profit 0 417 NM 731 1,709 134% 24% Net Profit 9 425 4424% 505 1,413 180% 30% Margin 1QFY12 1QFY13 Y-o-Y FY12 FY13f Y-o-Y 1Q/FY13f (%)Profit from operations before cost of fuel (%)
37.2 45.2 8.0 41.7 46.9 5.28
Gross profit from operations (%) 0.0 14.8 14.8 8.9 14.6 5.68 Net Profit Margin (%) 0.5 15.1 14.6 6.1 12.1 5.92
Source: RHB estimates, Company
* Our calculation on passenger yield is based on all revenues earned from passengers and airline related businesses (inclusive of charter aircraft revenue and ancillary income) divided by total RPK (revenue passenger km)
* RASK is calculated based on all revenues earned from passengers and airline related businesses (inclusive of charter aircraft revenue and ancillary income) divided by total ASK (available seat km)
Figure 27: Valuation of Nok Air Capitalized Fleet Value (x 8 years) - THBm 16,766.1 Less: Net Cash - THBm 6,801.8 Net Capitalized Fleet - THBm 9,964.3 Adjusted EV/EBITDAR multiple applied (x) 7.5 x: FY14 EBITDAR - THBm × 4,463.5 Adjusted EV - THBm 33,475.9 Less: Net Capitalized Fleet - THBm � 9,964.3 Market Cap value - THBm 23,511.6 Divided by: Number of Shares - m ÷ 625.0 FV per share - THB 37.6 Implied FY14 P/E (x) 13.1 Implied FY14 EV/EBITDA (x) 7.1 Implied FY13 PEG (X) 0.3
Source: RHB estimates
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 14
Figure 28: Peer comparison Last Market Cap FY01 FY02 FY01 FY02 FY02 Best PEG
Price (USD m) P/E (x) P/E (x) EV/EBITDA (x) EV/EBITDA (x) P/BV (x) ROE (%) (x)
Airasia Bhd AIRA MK 3.16 2780.3 10.5 10.4 7.6 7.1 1.3 10.6 0.9
Asia Aviation AAV TB 5.5 865.3 16.6 13.6 11.2 9.0 1.3 8.4 0.6
Tiger Airways Holdings Ltd TGR SP 0.63 488.7 12.5 10.4 10.6 7.8 1.5 22.0 -
Cebu Air Inc CEB PM 75.2 1053.9 12.7 10.1 7.9 6.7 1.8 15.9 0.4
Jet Airways India Ltd JETIN IN 478 702.7 30.9 9.5 7.3 6.4 25.5 13.7 -
Average Asia LCCs 16.6 10.8 8.9 7.4 6.3 14.1 0.6
Southwest Airlines Co LUV US 13.8 9953.3 13.4 11.2 4.4 4.0 1.3 9.2 0.7
Air Arabia AIRARABI DB 1.13 1435.7 11.8 9.8 8.5 6.7 0.9 8.4 -
Ryanair Holdings Plc RYA ID 6.87 13086.6 15.7 13.5 8.6 7.7 2.6 17.2 1.2
Allegiant Travel Co ALGT US 102 1950.4 18.9 16.1 7.2 6.1 4.1 21.8 1.6
Vueling Airlines Sa VLG SM 9.19 367.7 8.7 8.5 - - 1.0 9.8 -
Norwegian Air Shuttle As NAS NO 274 1672.4 11.1 8.6 6.4 5.3 2.9 28.9 -
Aer Linghus Group AERL ID 1.61 1141.8 13.6 11.2 4.2 3.8 1.0 6.9 -
Easyjet Plc EZJ LN 1288 7977.8 15.4 13.9 8.2 7.5 2.5 17.4 1.1
Jetblue Airways Corp JBLU US 6.31 1780.2 12.3 9.1 5.3 4.4 0.9 7.8 0.8
Gol Linhas Aereas Intel-Adr GOL US 3.99 1112.7 - 21.8 - - 2.7 3.0 -
Westjet Airlines Ltd WJA CN 22.2 2885.1 10.7 9.6 3.7 3.4 1.8 17.9 0.6
Average All 14.3 11.7 7.2 6.1 3.3 13.7 0.9
Nok Air NOK TB 527.3 11.5 9.0 6.5 4.1 3.1 46.0 0.2
31% 16% 28% 45% 51% -226% 63%Discount / (Premium) to Average Asia LCCs
Source: RHB estimates, Bloomberg
*Last price as of 18 June 2013 at respective local currencies
Key Assumptions Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F Dec-15F
ASK (m) 1508.2 2245.1 2915.7 4282.3 5642.3 7179.5
RPK (m) 1245.8 1802.5 2455.8 3554.3 4626.7 5887.2
Load Factor (%) 82.6% 80.3% 84.2% 83.0% 82.0% 82.0%
Number of flights 18169.0 28746.0 30149.0 43359.3 62185.2 78214.3
Number of aircraft (average) 7.0 13.3 12.9 15.5 23.0 30.0
Capacity 2,645,965 3,897,743 4,933,503 7,214,431 8,892,481 10,796,179
Number of passengers 2,210,000 3,140,000 4,120,000 5,987,978 7,291,835 8,852,866
Aircraft Utilization hours 8.7 7.3 8.1 9.7 10.0 10.0
Passenger Yield (THB) 3.36 3.36 3.35 3.30 3.30 3.31
RASK (THB) 2.77 2.69 2.82 2.74 2.71 2.72
CASK (THB) 2.36 2.57 2.57 2.34 2.34 2.31
CASK - ex fuel (THB) 1.59 1.57 1.64 1.45 1.43 1.41
Jet Fuel (USD/barrel) 89.9 135.6 130.1 135.0 140.0 140.0
% y-o-y change Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F Dec-15F
ASK (m) 48.9 29.9 46.9 31.8 27.2
RPK (m) 44.7 36.2 44.7 30.2 27.2
Load Factor (%) -2.8 4.9 -1.5 -1.2 0.0
Number of flights 58.2 4.9 43.8 43.4 25.8
Number of aircraft (average) 89.0 -2.8 20.3 48.4 30.4
Capacity 47.3 26.6 46.2 23.3 21.4
Number of passengers 42.1 31.2 52.3 20.4 20.0
Aircraft Utilization hours -16.5 11.9 19.7 2.7 0.0
Passenger Yield (THB) 0.0 -0.3 -1.5 0.1 0.3
RASK (THB) -2.8 4.6 -2.9 -1.1 0.3
CASK (THB) 9.2 -0.2 -9.0 -0.1 -1.3
CASK - ex fuel (THB) -1.3 4.5 -11.7 -1.8 -1.5
Jet Fuel (USD/barrel) 50.9 -4.1 3.8 3.7 0.0
Source: RHB estimates, Company
* Our calculation on Passenger yield is based on all revenues earned from passengers and airline related businesses (inclusive of charter aircraft revenue and ancillary income)
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 15
divided by total RPK (revenue passenger km)
* RASK is calculated based on all revenues earned from passengers and airline related businesses (inclusive of charter aircraft revenue and ancillary income) divided by total ASK (available seat km)
Detailed Income Statement
Profit & Loss (THBm) Dec-10 Dec-11 Dec-12 Dec-13f Dec-14f Dec-15f
Revenue from fares 3970.8 5726.9 7634.3 10828.2 14236.1 18295.8
Revenue from charters 0.6 22.4 187.1 280.7 294.7 303.5
Revenue from value added services 208.3 298.9 396.2 609.7 741.7 898.9
Total revenue 4179.7 6039.3 8217.6 11718.5 15272.5 19498.2
Cost of fuel -1151.1 -2246.2 -2691.6 -3790.8 -5127.9 -6459.7
The aircraft maintenance -510.4 -968.2 -1276.4 -1874.7 -2420.6 -3018.5
Airport fees -213.9 -330.4 -352.3 0.0 0.0 0.0
Costs of airport services -162.8 -275.0 -339.7 -796.2 -970.6 -1098.7
Other variable costs -367.9 -468.9 -616.5 -678.2 -746.0 -820.6
Expenses for employees -296.0 -349.5 -423.4 -550.4 -715.5 -930.2
Insurance information -56.8 -95.4 -96.0 -97.9 -98.9 -99.9
The cost of acquiring and restoring aircraft 0.0 -12.0 -55.2 -205.6 -249.4 -185.3
Other fixed costs -0.9 -2.4 -2.6 -3.4 -4.4 -5.7
Selling and administrative expenses -403.9 -440.0 -514.0 -558.4 -478.8 -530.1
Other -3.0 -3.7 3.1 3.1 3.1 3.1
Operating EBITDAR 1013.0 847.6 1853.0 3166.1 4463.5 6352.6
The operating lease aircraft -249.0 -436.9 -769.5 -1064.8 -1580.0 -2452.9
Aircraft charter rental -104.3 -109.6 -298.5 -298.5 -515.8 -619.0
Operating EBITDA 659.7 301.1 785.0 1802.9 2367.7 3280.8
Depreciation -26.8 -31.9 -38.3 -78.5 -255.5 -316.2
Amortization -10.5 -12.1 -12.1 -12.1 -12.1 -12.1
Operating EBIT 622.4 257.1 734.6 1712.2 2100.1 2952.5
Interest Income 5.4 32.9 40.7 54.1 150.6 217.3
Interest Expense 0.0 0.0 0.0 0.0 0.0 0.0
Exceptional Income - Net -3.6 2.1 -255.4 0.0 0.0 0.0
Pretax Profit 624.2 292.1 519.9 1766.3 2250.7 3169.8
Taxation -22.7 -92.3 -15.2 -353.3 -450.1 -634.0
Reported Net Profit 601.5 199.8 504.7 1413.0 1800.5 2535.9
Recurring Net Profit 605.1 197.7 760.1 1413.0 1800.5 2535.9
Source: RHB estimates, Company
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 16
Financial Exhibits
Profit & Loss (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F
Total turnover 4,180 6,039 8,218 11,719 15,272
Cost of sales (2,762) (4,839) (6,341) (8,500) (11,358)
Gross profit 1,417 1,200 1,876 3,219 3,915
Gen & admin expenses (795) (943) (1,142) (1,506) (1,815)
Operating profit 622 257 735 1,712 2,100
Operating EBITDA 660 301 785 1,803 2,368
Depreciation of fixed assets (27) (32) (38) (79) (256)
Amortisation of intangible assets (11) (12) (12) (12) (12)
Operating EBIT 622 257 735 1,712 2,100
Interest income 5 33 41 54 151
Exceptional income - net (4) 2 (255) - -
Pre-tax profit 624 292 520 1,766 2,251
Taxation (23) (92) (15) (353) (450)
Profit after tax & minorities 602 200 505 1,413 1,801
Reported net profit 602 200 505 1,413 1,801
Recurring net profit 605 198 760 1,413 1,801
Source: Company data, RHB Estimates
Cash flow (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F
Operating profit 622 257 735 1,712 2,100
Depreciation & amortisation 37 44 50 91 268
Change in working capital 42 42 (45) (280) (227)
Other operating cash flow 14 32 (36) 26 (54)
Operating cash flow 717 374 705 1,548 2,086
Interest received 5 33 41 54 151
Tax paid (9) (87) 98 (14) (318)
Cash flow from operations 713 321 844 1,589 1,919
Capex (54) (45) (50) (2,333) (1,576)
Other new investments (29) (13) (8) - -
Other investing cash flow (700) (315) (322) 50 139
Cash flow from investing activities (782) (373) (380) (2,283) (1,437)
Proceeds from issue of shares - - - 3,250 -
Other financing cash flow - (100) (414) (250) (707)
Cash flow from financing activities - (100) (414) 3,000 (707)
Cash at beginning of period 422 349 197 247 2,552
Total cash generated (70) (152) 50 2,305 (225)
Forex effects (4) 0 (0) - -
Implied cash at end of period 349 197 247 2,552 2,327
Source: Company data, RHB Estimates
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 17
Financial Exhibits
Balance Sheet (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F
Total cash and equivalents 1,054 1,247 1,657 4,615 6,659
Inventories 3 5 4 15 21
Accounts receivable 28 26 30 96 126
Other current assets 69 579 408 840 1,058
Total current assets 1,154 1,857 2,098 5,566 7,864
Total investments 4 5 5 5 5
Tangible fixed assets 58 71 81 2,053 3,347
Intangible assets 37 38 34 32 29
Total other assets 133 46 35 40 52
Total non-current assets 232 159 155 2,129 3,433
Total assets 1,385 2,016 2,252 7,695 11,297
Accounts payable 191 517 420 597 764
Other current liabilities 458 628 853 1,733 2,632
Total current liabilities 648 1,145 1,273 2,330 3,396
Other liabilities - 74 91 114 143
Total non-current liabilities - 74 91 114 143
Total liabilities 648 1,218 1,364 2,444 3,538
Share capital 500 500 500 625 625
Retained earnings reserve - 30 50 2,625 2,625
Other reserves 237 267 338 2,001 4,508
Shareholders' equity 737 797 888 5,251 7,758
Total equity 737 797 888 5,251 7,758
Total liabilities & equity 1,385 2,016 2,252 7,695 11,297
Source: Company data, RHB Estimates
Key Ratios (THB) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F
Revenue growth (%) 0.0 44.5 36.1 42.6 30.3
Operating profit growth (%) 0.0 (58.7) 185.7 133.1 22.7
Net profit growth (%) 0.0 (66.8) 152.6 180.0 27.4
EPS growth (%) 0.0 (66.8) 152.6 148.9 14.7
Bv per share growth (%) 0.0 8.2 11.4 373.0 47.7
Operating margin (%) 14.9 4.3 8.9 14.6 13.8
Net profit margin (%) 14.4 3.3 6.1 12.1 11.8
Return on average assets (%) 0.0 11.7 23.7 28.4 19.0
Return on average equity (%) 0.0 26.0 59.9 46.0 27.7
Net debt to equity (%) (143.0) (156.4) (186.5) (87.9) (85.8)
DPS 0.20 0.23 1.10 1.13 1.44
Recurrent cash flow per share 1.43 0.64 1.69 2.82 3.07
Source: Company data, RHB Estimates
Nok Airlines (NOK TB) 19 June 2013
See important disclosures at the end of this report 18
SWOT Analysis
Thailand is a popular tourism hub
Favorable demographics
Strong branding
Extensive booking and payment distribution channel
Earnings are susceptible to volatility in jet fuel prices
Intensifying competition in the low-cost carrier space
Bangkok to be AirAsia X’s second hub
Room to increase gearing to fund more aircraft acquisitions
More profit upside on economies of scale
Balance sheet is not strong enough for massive aircraft acquisitions
Venturing into international routes could be challenging due to intensifying competition
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
Jan
-10
Jan
-11
Jan
-12
Jan
-13
Jan
-14
P/E (x) vs EPS growth
P/E (x) (lhs) EPS growth (rhs)
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10%
20%
30%
40%
50%
60%
70%
Jan
-10
Jan
-11
Jan
-12
Jan
-13
Jan
-14
P/BV (x) vs ROAE
P/B (x) (lhs) Return on average equity (rhs)
Source: Company data, RHB Estimates Source: Company data, RHB Estimates
Company Profile Nok Air is one of Thailand’s leading low-cost carriers with the most extensive domestic route coverage. It operates out of two hubs, in Chiang Mai and Don Mueang.
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RHB Guide to Investment Ratings Buy: Share price may exceed 10% over the next 12 months Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain Neutral: Share price may fall within the range of +/- 10% over the next 12 months Take Profit: Target price has been attained. Look to accumulate at lower levels Sell: Share price may fall by more than 10% over the next 12 months Not Rated: Stock is not within regular research coverage Disclosure & Disclaimer All research is based on material compiled from data considered to be reliable at the time of writing, but RHB does not make any representation or warranty, express or implied, as to its accuracy, completeness or correctness. No part of this report is to be construed as an offer or solicitation of an offer to transact any securities or financial instruments whether referred to herein or otherwise. This report is general in nature and has been prepared for information purposes only. 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