Key Takeaways 19 Aug 2015

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Not rated

TP: N.A. Upside/downside N.A.

Sector Transportation & Logistics

Paid-up shares (shares mn) 2,100

Market capitalization (Bt mn) 44,730

Free float (%) 34.28

12-mth daily avg. turnover (Bt mn) 134.90

12-mth trading range (Bt) 24.80/19.30

Major shareholders (%)

Prasattong-Osoth Family 64.44

Bangkok Bank 5.00

THAI NVDR 1.99

Thailand Research Department

Mr. Warut Siwasariyanon,

License, No. 17923

Ms. Sukanya Leelarwerachai

Assistant Analyst

Bangkok Airways PCL (BA)

► Analyst meeting on 18 Aug 2015.

► Reported 2Q15 normalized loss of Bt22mn, down 102% QoQ

but up 94% YoY. Earnings were lower than the Bloomberg

consensus of Bt201mn.

► 3Q15 should be another good quarter due to a solid high

season for BA.

2Q15 normalized loss of Bt22mn, down 102% QoQ up 94% YoY

As the second quarter is normally the low season for Thai tourism,

including Samui which is the second hub of the company, BA’s

operating revenue declined 24% QoQ but was up 9% YoY.

Passengers carried rose 5% YoY, while average fare improved

2% YoY. Gross profit margin improved to 11% from 5% in 2Q14

as a result of the decline in the price of jet fuel which helped cost

per available seat kilometers (CASK) decline 1.2% YoY to Bt3.2

per ASK. However, the company still reported normalized loss of

Bt22mn as operating revenue growth did not cover operating cost,

as 2Q is normally the weakest quarter but it still improved YoY. By

including gain on exchange of Bt113mn, the net profit was

Bt91mn, down 91% QoQ but up 128% YoY.

Management’s outlook for 3Q15 onward

3Q15 should be another good quarter for BA as 3Q is normally the

high season for the company, especially the Samui route, as there

are long holidays for Europe. Management guided that 3Q15

(YTD), load factor was at 75% while passenger growth was

approximately 13% YoY. For 2015, the management still targets

6mn passengers (up 25% YoY). The negative impact from the

bombing at Erawan shrine should be limited to the short term if

martial law is not implemented again. In 1H15, passenger revenue

contributed from China accounted for only 5% of total passenger

revenue. BA’s strategy of network expansion with new codeshare

and interline is a strength as growth in revenues via partner airlines

increased 32% in 2Q15. In 2H15, BA plans to increase

codesharing by at least five airlines and receive an additional three

aircraft. Moreover, in 2H15, existing partners will up-gauge aircraft

in-out three key airports (Bangkok, Kuala Lumpur and Singapore).

This will increase estimated seat capacity by around 26% and

implies more passenger carriage for BA. As for ICAO concerns,

the FAA is expected to return to audit again in Sep-Oct. If they

downgrade Thailand from category one to two, EASA may return

to audit BA again in Nov 2015. However, the company has IOSA

certificated from IATA which is reliable and the company works

closely with its partner airlines to guarantee BA’s standards are

acceptable. Therefore, the negative impact is consider to be

limited for BA.

Key Takeaways 19 Aug 2015

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Figure 1: BA's 2Q15 earning results

Unit: Btmn 2Q14 1Q15 2Q15 %QoQ %YoY 1H14 1H15 %YoY

Operating Revenue 4,525 6,482 4,944 -24% 9% 10,437 11,427 9%

Cost of services 4,304 4,487 4,391 -2% 2% 8,746 8,878 2%

Gross Profit 221 1,995 553 -72% 150% 1,690 2,548 51%

SG&A 672 770 811 5% 21% 1,384 1,581 14%

Operating profit (451) 1,226 (258) -121% 43% 306 967 216%

Gain on exchange 36 113 - 218% (4) 117 3326%

Gain on sale investment 3 - 0.07 - 3.37 0.07 -98%

Interest Expense 407 381 400 5% -2% 825 781 -5%

Normalized profit (365) 1,070 (22) -102% 94% 188 1,044 455%

One-off items 39 - 113 - 191% (0.26) 117

Net Profit (326) 1,070 91 -91% 128% 188 1,161 518%

EPS (Bt/share) (0.21) 0.51 0.04 -91% 121% 0.12 0.55 365%

Gross Profit Margin (%) 5% 31% 11% 16% 22%

Operating Profit Margin (%) -10% 19% -5% 3% 8%

Net Profit Margin (%) -7% 17% 2% 2% 10%

Source: SET, Compiled by AWS

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CG Report

Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2013.

Corporate Governance Report disclaimer

The disclosure of the survey result of the Thai Institute of Directors

Association (“IOD”) regarding corporate governance is made pursuant

to the policy of the Office of the Securities and Exchange Commission.

The survey of the IOD is based on the information of a company listed

on the Stock Exchange of Thailand and the Market for Alternative

Investment disclosed to the public and able to be accessed by a

general public investor. The result, therefore, is from the perspective of

a third party. It is not an evaluation of operation and is not based on

inside information.

The survey result is as of the date appearing in the Corporate

Governance Report of Thai Listed Companies. As a result, the survey

result may be changed after that date, Asia wealth Securities Company

Limited does not conform nor certify the accuracy of such survey result.

Score Range Number of Logo Description

90 – 100

80 – 89

70 – 79

60 – 69

50 – 59

Excellent

Very Good

Good

Satisfactory

Pass

BAFS EGCO IRPC KTB PTTEP SAT SIM TOPBCP GRAMMY IVL MINT PTTGC SC SPALIBTS HANA KBANK PSL SAMART SCB TISCOCPN INTUCH KKP PTT SAMTEL SE-ED TMB

AAV BIGC DELTA HMPRO NBC PJW SAMCO SVI TOGACAP BKI DRT ICC NCH PM SCC TCAP TRCADVANC BLA DTAC KCE NINE PPS SINGER TF TRUEANAN BMCL DTC KSL NKI PR SIS THAI TSTEAOT BROOK EASTW LANNA NMG PRANDA SITHAI THANI TSTHASIMAR CENTEL EE LH NSI PS SNC THCOM TTAASK CFRESH ERW LHBANK OCC PT SNP TIP TTWASP CIMBT GBX LOXLEY OFM QH SPI TIPCO TVOBANPU CK GC LPN PAP RATCH SSF TK UACBAY CNT GFPT MACO PE ROBINS SSI TKT VGIBBL CPF GUNKUL MC PG RS SSSC TNITY VNTBECL CSL HEMRAJ MCOT PHOL S&J STA TNL WACOAL

2S BEAUTY CSS IHL MFEC PPM SKR TBSP TSC ZMICOAF BEC DCC INET MJD PPP SMG TEAM TSCAH BFIT DEMCO IRC MODERN PREB SMK TFD TTCLAHC BH DNA IRCP MONO PRG SMPC TFI TUFAIT BJC EA ITD MOONG PRIN SMT THANA TVDAJ BJCHI ESSO KBS MPG PTG SOLAR THIP TWFPAKP BOL FE KGI MTI QLT SPC THREL UMIAKR BTNC FORTH KKC NC QTC SPCG TIC UPAMANAH BWG FPI KTC NTV RCL SPPT TICON UPFAMARIN CCET GENCO L&E NUSA SABINA SST TIW UPOICAMATA CGD GL LRH NWR SALEE STANLY TKS UTAP CGS GLOBAL LST NYT SCBLIF STEC TLUXE UVAPCO CHOW GLOW MAJOR OGC SCCC STPI TMI UWCAPCS CI GOLD MAKRO OISHI SCG SUC TMT VIHAQUA CKP HOTPOT MATCH PACE SEAFCO SWC TNDT WAVEARIP CM HTC MBK PATO SEAOIL SYMC TPC WHAAS CMR HTECH MBKET PB SFP SYNEX TPCORP WINASIA CSC HYDRO MEGA PDI SIAM SYNTEC TRT WINNERAYUD CSP IFS MFC PICO SIRI TASCO TRU YUASA

Source: Thai Institute of Directors (IOD)

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CG Report

Below 50 No logo given N/A

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Pathumwan Bangkok 10330

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Silom, Bangrak, Bangkok, 10500 Thailand

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Chaengwattana

99/99 Moo 2 Central Plaza Chaengwattana Office Tower, 22nd Flr.,

Room 2204 Chaengwattana Road, Bang Talad, Pakkred,

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Bangkaew Bangplee, Samutprakarn 10540

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Rayong 356/18 Sukhumvit Road, Nuen-Phra Sub District, Muang District,

Rayong Province 21000

038-808200 038-807200

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40000

043-334-700 043-334-799

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20000

038-274-533 038-275-168

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District, Meung District, Chachoengsao 24000

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