Earnings Report /
Thailand

Asia Aviation PCL: The deep 2Q20 red ink doesn’t matter if AAV can get through this year

  • The deepest red ink

  • AAV reported a net loss of Bt1,141m for 2Q20

  • Stripping out extra items, the core loss would be Bt2,046m

Bualuang Securities
13 August 2020

We don’t think the bad 2Q20 result will have much impact on the stock price (no one expected a good result). In the interim, the govt is expected to announce some sort of remedy for air carriers soon (otherwise Thailand’s tourist industry—a major economic driver and employer—would take a very long time to recover). Looking forward to 2021, when a reliable vaccine or treatment is available and the public discontinues wearing masks, huge pent-up demand for travel will release in the face of reduced supply and cheaper operating costs (both staff costs and jet fuel price). And over the long-term, AAV could build business by opening another hub at Suvarnabhumi Airport. BUY!

The deepest red ink

AAV reported a net loss of Bt1,141m for 2Q20, deeper into the red by 137% YoY and 70% QoQ and its weakest number since listing on the SET. But that reported red ink was 26% shallower than our estimate and 47% shallower than the consensus, due to a big FX gain. Stripping out extra items, the core loss would be Bt2,046m, 32% deeper than our estimate (a lower average fare and a higher cost of sales than assumed), but 22% shallower than the street number.