Bangkok--10 Jan--Fitch Ratings
Fitch Ratings-Bangkok/Singapore-09 January 2012: Fitch Ratings (Thailand) Limited has affirmed Bangkok Aviation Fuel Services Public Company Limited's (BAFS) National Long-Term rating at 'A+(tha)' and the National Short-Term rating at 'F1(tha)'. The Outlook is Stable.
BAFS's ratings reflect its dominant position in the aviation fuel supply services market in Thailand. It is the sole operator of the fuel depot and hydrant network at Suvarnabhumi Airport (SA), the largest international airport in Thailand. BAFS is also a major into-plane fuelling service provider at SA, with a market share of around 85%. The company faces limited competition and benefits from high barriers to entry due to the required concessions to operate.
BAFS's revenues in the first nine months of 2011 rose 10.5% yoy. Due to Thailand's floods in October and November of 2011, its fuel uplift volume fell about 6% yoy in November 2011. However, with air traffic normalising, uplift volumes were down only 0.5% in December 2011 on a yoy basis. Fitch expects BAFS's full-year revenue for 2011 to grow around 7%-8%. EBITDAR margin is likely to decrease slightly to 56%-57% in 2011 from 58%-59% in the previous two years, which is partly due to higher personnel expenses. BAFS's financial leverage has been improving with net adjusted debt/last 12-month operating EBITDAR 1.2x at September 2011, compared with 1.5x at end-2010.
Fitch expects BAFS's uplift volumes to continue to grow in 2012-2013, in line with increasing air traffic supported by local and regional economic growth. Robust passenger traffic growth is expected particularly from China, Korea and India. Although passenger arrivals into Thailand have been affected by political unrest and natural disasters, like the recent flooding in Bankgkok, Fitch notes Thailand's air traffic has not been significantly affected for prolonged periods.
BAFS is insulated from the volatility of fuel prices, given its revenues are derived solely from fuelling services while fuel is sold by oil companies to airlines. BAFS's major cost is its pre-agreed concession fee. As such, its profitability is quite stable.
Potential large debt-funded investments over the next 12 months may delay further de-leveraging. However, given the de-leveraging achieved since 2009, BAFS now has adequate rating headroom for some large debt-funded investments.
The ratings could be negatively affected by larger-than-expected debt-funded investments, or high dividend payouts, that lead to an increase in net adjusted debt/EBITDAR to above 2.0x on a sustained basis. Given BAFS's limited operating scale and diversity of operations, both of which are not expected to materially improve over the medium-term, positive rating action is unlikely over the next 12-18 months.
Contacts:
Primary Analyst
Somruedee Chaiworarat
Associate Director
+66 2655 4762
Fitch Ratings (Thailand) Limited
Wave Place 13th Fl., Wireless Road, Lumpini, Patumwan,
Bangkok 10330, Thailand
Secondary Analyst
Obboon Thirachit
Director
+66 2655 4757
Committee Chairperson
Buddhika Piyasena
Senior Director
+65 6796 7223
Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6796 7215, Email:
[email protected].