World’s Biggest Airport Operator Surges on Higher Fees

(Bloomberg) -- Airports of Thailand Pcl, the world’s biggest airport operator by market value, surged the most in six years in Bangkok trading after announcing higher-than-expected concession fees for duty free shops and commercial areas at four of the Southeast Asian nation’s international airports.

The state-controlled company will receive 20% of sales, with a minimum guarantee of 15.4 billion baht ($493 million), in the first year from a concession given to King Power Group to run duty free shops at Bangkok’s Suvarnabhumi airport, according to a stock exchange filing. King Power will also pay at least 5.8 billion baht in the first year for operating commercial areas at that airport, it said.

AOT will also get a minimum 2.33 billion baht from King Power for its contract to operate duty free shops at international airports in Phuket, Chiang Mai and Hat Yai, according to the statement.

Shares in the airport operator jumped as much as 9.9%, the most since June 2013, to 74.75 baht before trading at 72.50 baht as of 3:20 p.m. in Bangkok.

The total minimum guaranteed annual revenue of 23.5 billion baht is 2.4 times what AOT received from King Power in 2018, according to Denise Wong, a Bloomberg Intelligence analyst. The higher-than-estimated minimum guaranteed amount from King Power will add “upside” to the share price, Maybank Kim Eng Securities (Thailand) Pcl said in a note.

King Power won the bidding to operate duty-free shops at the four international airports from 28 September, 2020 to 31 March, 2031. It also got a separate concession to operate commercial areas at the Bangkok international during the same period.

--With assistance from Lee Miller.

To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

To contact the editors responsible for this story: Sunil Jagtiani at sjagtiani@bloomberg.net, Margo Towie, Teo Chian Wei

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