Bangkok Aviation Fuel
Services (BAFS) reported 2002 net profit of Bt320mn, a sharp
turnaround from 2001's loss of Bt76mn. In 2001, the company
set a one-time provision of Bt415mn for its 17%-owned
affiliate – Fuel Pipeline Transportation – to guarantee
its third debt-restructuring deal with creditors. Without
this provision, BAFS's normalized earnings would have
slightly declined by 6% to Bt320mn.
The two factors that impacted
the company's earnings last year were the strengthening baht
and a reduction in flights by Qantas Airways and British
Airways to Don Muang Airport last year. However, passenger
traffic starting to recover last year after the 9-11 event.
The total number of flights serviced by BAFS rose 5.5% from
95,771 in 2001 to 101,015 and volume uplift rose by 1.6%
yoy.
BAFS's earnings prospects are
essentially tied to the tourism market. The company is,
therefore, susceptible to a slowdown in tourist travel in
the event of terrorist attacks on the airline industry or a
Second Gulf War. However, the numbers so far this year look
encouraging with the number of flights up by 10.8% yoy in
January 2003 and volume uplift increasing 5.9% to 322
million litres. Our current earnings forecasts assume the
company's volume uplift will grow 2.2% from 3,551 million
litres to 3,630 million litres.
Recently, the company
announce to pay another Bt0.25 dividend from 2H02 earnings
after paying a Bt0.25 interim dividend, representing a 6.4%
yield at the current share price.
However, given the external
uncertainties, particularly the possibility of a second Gulf
War, we are remain a little more cautious on the share and
its potential to reach or price target of Bt10.50. As a
result, we can only rate BAFS as an ACCUMULATE.
