GUANGZHOU BAIYUN INTERNATIONAL AIRPORT(600004):NEW CONTRACTS FOR TERMINAL 2 AND GTC ADVERTISING;RECOVERY IN INTERNATIONAL ROUTES ACCELERATES

2023-05-15 14:40:09 和讯  中金公司Qikun WU/Xinyue
  What's new
  Guangzhou Baiyun International Airport recently announced its Terminal 2 and ground transport center (GTC) advertising media management project contract (hereinafter referred to as the “contract”), and also released its production and operation data for April 2023. According to the terms of the agreement, Beijing Voyage Media will pay for the use of the advertising resources and operating rights of the firm’s Terminal 2 and GTC. Beginning on May 13, 2023, the contract will be in effect for one operational year every 12 months, spanning an operational period of “5+3” years.
  1) Beijing Voyage Media will pay at least Rmb398mn for the advertising operating rights transfer fee in the first year of operation, assuming a minimum forecast passenger throughput of 50mn. If the passenger throughput exceeds or falls short of the forecast volume by 20%, appropriate adjustments will be made by increasing or decreasing the fee by 50% for the part where the actual increase in passenger throughput exceeds 20%.
  2) If the YoY growth rate of passenger throughput is less than 20% in the following operating years, the transfer fee will increase by 6% YoY. If the YoY growth rate of passenger throughput exceeds 20%, the transfer fees shall be increased by 50% for the part where the actual increase in passenger throughput exceeds 20%.
  Comments
  We think the new Terminal 2 and GTC advertising contracts are largely in line with expectations. According to a company announcement in May 2017, JCDecaux operated Terminal 2 and GTC advertising from April 2018 to April 2023. The advertising resource usage fee was composed of a guaranteed minimum fee and excess commissions. The guaranteed minimum fee was Rmb360mn in the first year after Terminal 2 started operation, then increased by 6% YoY.
  Based on the historical revenue of the firm’s advertising segment, we think the amount of excess commissions may have been low before the COVID-19 pandemic. The transfer fee for advertising operation rights in the first year of the contract is at least Rmb398mn, assuming a minimum forecast passenger throughput of 50mn. The overall passenger throughput at Baiyun International Airport recovered to 5.13mn in April 2023.
  The transfer fee for advertising operation rights in the first operating year of the contract surpasses the advertising resource usage fee of the firm’s Terminal 2 and GTC over April 26, 2022-April 25, 2023 (Rmb381mn)。 It also exceeds the guaranteed minimum fee in 2019, which was about Rmb375mn)。 In addition, we expect the firm to record higher advertising resource transfer fees if passenger throughput exceeds 60mn in the coming year.
  Recovery in international flights accelerates; watch per-customer sales at DFS. According to the firm’s operation data for April, the passenger traffic of its international routes recovered to 37% of the April 2019 level (vs. 18% in February and 26% in March) and 46% on April 29. Data from China Customs Media shows that sales value of duty-free shops (DFS) at Guangzhou Baiyun International Port reached Rmb17.65mn in January 2023 (up 390% YoY)。 This implies sales value at around Rmb118 per customer, exceeding the 2019 level. We suggest keeping an eye on the firm’s per-customer sales at DFS.
  Financials and valuation
  We maintain our 2023 and 2024 earnings forecasts at Rmb687mn and Rmb1.67bn. The stock is trading at 50.6x 2023e and 20.8x 2024e P/E. We maintain an OUTPERFORM rating and a target price of Rmb17.70. Our TP implies 25x 2024e P/E, offering 20.5% upside.
  Risks
  COVID-19 resurgence; slower-than-expected reopening of international routes; tough competition from other DFS; higher-than-expected capex.
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(责任编辑:王丹 )

   【免责声明】本文仅代表第三方观点,不代表和讯网立场。投资者据此操作,风险请自担。

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