[ET Net News Agency, 11 November 2019] Morgan Stanley raised its target price for
Beijing Capital International Airport (BCIA)(00694) to HK$6.6 from HK$6.3 and maintained
its "underweight" rating.
The research house holds a negative view of BCIA's 2020-21 earnings, mainly due to
traffic dilution after the launch of Daxing airport. The slot allocation plan between
Daxing Airport and BCIA announced by CAAC in January 2019 has quite negative implications
for BCIA.
It (1) prevents BCIA from adding slots before the 2021/22 winter/spring season if
Daxing's pax traffic is below 45mn; (2) encourages airlines to relocate to Daxing by
granting additional bonus slots to airlines that move quickly, Morgan said.
Despite traffic decline, Morgan does not expect BCIA's operating cost to drop
significantly, as it estimated 50% is relatively fixed (depreciation, staff costs,
maintenance, rental, etc.). It expects operating costs to marginally decline 2%/1% in
2020/2021, versus revenue decline of 8%/2%. Morgan expects BCIA's net profit to decline
30%/18% in 2020 and 2021, respectively, based on the slot/traffic projections listed in
the allocation plan document for BCIA and Daxing Airport. (KL)