[ET Net News Agency, 6 November 2019] HSBC Global Research initiated coverage on
Beijing Capital International Airport (BCIA)(00694) with a "buy" rating and a target price
of HK$9.5.
The research house said BCIA was the world's second busiest airport in terms of
passenger (pax) throughput in 2018. It scores favourably on HSBC's proprietary key success
factor metrics. Over the past five years, BCIA's share price has increased 29% versus a 1%
decline in the HSCEI but has lagged behind Shanghai International Airport (Shanghai code:
600009), which has risen 401% over the same period.
HSBC attributed the underperformance to the abolition of airport fees, which were
announced in June 2018, potential loss of traffic to the new Beijing Daxing International
Airport, and uncertainty around related-party transactions. But it thinks this relative
underperformance is overdone.
HSBC expects the decline in BCIA's pax in 2019-21 to be less severe and the recovery in
2021-25 to be sharper than what CAAC has projected. In 2019-21, HSBC forecast a 25m
decline in BCIA's pax (-9% CAGR), towards the low end of BCIA's guidance range (25-28m)
and sharply lower than CAAC's projections, which imply a CAGR of -13%. (KL)