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Investing.com - JPMorgan has downgraded Airports of Thailand PCL (BK:AOT) (OTC:AIPUY), a $17.66 billion market cap company, from Neutral to Underweight while maintaining its price target of THB28.00. The company maintains impressive gross profit margins of 69.53%.
The stock has surged approximately 45% in less than two months, significantly outpacing the SET index’s 15% gain during the same period. This rally was fueled by news reports of a potential passenger service charge (PSC) increase and strong fund inflows from domestic investors.
JPMorgan identifies three key variables currently driving AOT’s share price: international passenger volumes, concession renegotiation outcomes, and PSC increase potential. Following the recent rally to THB40 per share, the stock has re-rated to 16x EV/EBITDA and 35x P/E for FY26E.
The investment bank believes these valuations reflect optimistic outcomes across all three variables despite significant uncertainties. JPMorgan’s base case assumptions remain unchanged for FY26E, including international passenger volume matching FY19 levels, 2019 take-rates for concessions, and no international PSC increase in the next 12 months.
The downgrade reflects JPMorgan’s view that the stock does not warrant a premium over regional airports under its base case assumptions due to material loss in earnings power and lower returns on capital.
In other recent news, Airports of Thailand has seen its stock rating upgraded by two major financial institutions. HSBC has upgraded the company’s stock rating from hold to buy, while also adjusting its price target down to THB35.00 from THB40.00. This decision comes in light of a significant decline in the company’s stock, which has decreased by 50% since mid-February. Meanwhile, JPMorgan has also upgraded Airports of Thailand’s stock rating, moving it from underweight to neutral. JPMorgan adjusted its price target from THB32.00 to THB28.00, following an 18% drop in the company’s share price over the past month. The company’s performance has been impacted by concession concerns and weak tourist arrivals, leading to an underperformance against the broader market by over 30% year-to-date. These recent developments highlight the financial community’s response to the challenges faced by Airports of Thailand.
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