Auckland International Airport Limited (AIA)



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General Information
Company Name: Auckland International Airport Limited
Stock Code: AIA
Website: www.auckland-airport.co.nz
GICS Sub-Industry: Airport Services
Market Cap ($M): 4,893
Equiv. Shares (M): 1,190

Current Price Data+
Current Price Open High Low Last Close Volume Price Movement
 $ 4.110 $ 4.060 $ 4.110 $ 4.040 $ 4.030 46,729 $ 0.080  1.985 %

Current Broker Consensus Recommendation more
Recommendation: Sell (4)
Recommendation Date: 17th Dec 2014
Brokers Surveyed: 1

Company Overview

Business Description:
Auckland International Airport Limited (AIA) is a New Zealand-based company providing airport facilities and supporting infrastructure in Auckland, New Zealand. AIA’s core operations are aeronautical activities, on airport retail concessions and car parking facilities, standalone investment properties and other charges and rents associated with operating an airport. AIA also holds investments in companies operating in airport and related businesses located in New Zealand and Australia.

Strategy Analysis:
The strategic growth priority for airport is to grow its aeronautical and retail income through meaningful passenger growth over the longer term. Management is actively engaging with aircrafts and is looking at ways and means to increase passenger capacity out of Auckland in a significant manner. It has been quite successful of late in enticing major Trans-Tasman and some long haul carriers to Auckland. We estimate capacity out of Auckland will rise by approximately 1.3m as a result. This is likely to spur international passenger growth over the next 2-3 years. Queenstown and NQA have delivered good results and are ahead of managements target in terms of passenger numbers. The goal is to extract meaningful returns out of those acquisitions through route development and other strategic initiatives. We don´t see the company making any further acquisitions for the foreseeable future. In the medium term management is intent on giving a thrust to its property business and has planned major property related capital expenditure over the next few years to capitalize on its massive land bank. Management sees immense opportunities to lift revenues in this business and has set itself a target of doubling revenues by FY14. On the aeronautical front, the company is thinking about investing in the domestic terminal to increase capacity and alleviate traffic congestion. It proposes to invest $100-150m in phase 1 to build a new integrated domestic terminal and taxiway alongside the international terminal. This will take 3 years to build. In the interim the firm is considering making minor investments of $15-20m to tide over near term capacity issues. AIA intends to recover this cost by passing it on to passengers. Phase 2 of the plan will be implemented after 3 years and involves the second part of a new integrated terminal alongside the international terminal, a northern runway and taxiway system. The firm then proposes to close the existing domestic terminal. While the cost for the second phase wasn´t revealed we think it could be in the order of $100-150m as well. Auckland Airport reported NPAT up 11.3% to NZ$76.91m for the half-year ended 31 December 2012. Revenue from ordinary activities were NZ$223.55m, up 3.6% from last year. Basic and Diluted EPS were 5.82 cents compared to 5.22 cents last year. Net operating cash flow was NZ$93.22m compared to $94.23m last year. The interim dividend declared was 5.75 cents, compared with 4.4 cents last year.


Financial Summary
Year to Jun NPAT EPS EPS chg (%) PER DPS Yield (%) Franking (%)
2016  F 146.9 12.3 3.0 33.3 12.3 3.0 0.0
2015  F 142.6 12.0 16.4 34.3 12.0 2.9 0.0
2014  A 136.1 10.3 10.7 31.0 10.5 3.3 0.0
Source: Morningstar analyst estimates.

Peer Comparison
EPS Growth (%) P/E (%) Dividend Yield (%)
Company Mkt Cap 2014 A 2015 F 2016 F 2014 A 2015 F 2016 F 2014 A 2015 F 2016 F
Auckland Airport (AIA) $4,798 M 0.2577 0.1295 0.0747 33.0328 29.2453 27.2113 1.62 3.42 3.67
Sydney Airport (SYD) $10,483 M -0.6770 2.0836 0.1658 152.0900 49.3222 42.3077 4.76 4.97 5.23

Market Comparison
Earnings P/E Ratio P/B Ratio P/E Growth P/S Ratio
AIA 1.32 31.8 1.80 3.12 12.8
Market 0.88 14.7 1.18 1.88 1.45
Sector 0.99 14.8 1.54 1.54 0.80

Directors
Name Position Start Date
Mr James Bruce Miller Non-Executive Director 04 September 2009
Mr Richard John Didsbury Non-Executive Director 20 November 2007
Mr Brett Alan Godfrey Non-Executive Director 28 October 2010
Mr John Alston Brabazon Non-Executive Director 20 November 2007
Ms Justine Smyth Non-Executive Director 02 July 2012
Ms Michelle Lee Guthrie Non-Executive Director 24 October 2013
Ms Christine Spring Non-Executive Director 23 October 2014
Sir Henry William van der Heyden Non-Executive Director,Non-Executive Chairman 04 September 2009

Management
Name Position
Paul Divers Acting General Manager Retail and Commercial
Adrian Littlewood Chief Executive Officer
Simon Robertson Chief Financial Officer
Charles Spillane Company Secretary
Glenn Wedlock General Manager Aeronautical Operations
Judy Nicholl General Manager Aeronautical Operations
Peter Alexander General Manager Property

Substantial Shareholders
Holding Name
116,712,656 (8.80%) Manukau City Investments Limited
165,501,630 (12.50%) Auckland City Council

Calendar of Events
Date Event
25 August 2015 Report (Annual)
19 February 2015 Report (Interim)
© 2011 Morningstar, Inc. All rights reserved. The data and content contained herein are not guaranteed to be accurate, complete or timely. Neither Morningstar, nor its affiliates nor their content providers will have any liability for use or distribution of any of this information. To the extent that any of the content above constitutes advice, it is general advice that has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice and we recommend you obtain financial, legal and taxation advice before making any financial investment decision. If applicable investors should obtain the relevant product disclosure statement and consider it before making any decision to invest. Some material is copyright and published under licence from ASX Operations Pty Limited ACN 004 523 782 ("ASXO"). DISCLOSURE: Employees may have an interest in the securities discussed in this report. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.asp.

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