AST - Recovery of foreign arrivals continues supporting earnings

AST released its H1 2024 results with revenue and NPAT increasing 24%/27% YoY, respectively, fulfilling 44% and 43% of our 2024F full-year forecasts. These results are slightly behind our expectations and as a result, we foresee potential downside risk to our forecasts, pending a fuller review.
In Q2 2024, revenue and NPAT decreased 9% and 14% QoQ, respectively, due to seasonal factors. However, these results still translated to respective increases of 18% and 10% YoY, mainly driven by the recovery of the international passengers.
Foreign arrivals fully recovered in H1 2024, reaching 104% of the pre-Covid levels, with Chinese arrivals achieving 76%. Per ACV, international passengers recovered 39% YoY to 20 million, in line with our full-year forecast of 43 million. We expect international passengers’ recovery to continue, with a higher recovery rate of Chinese passengers during H2 2024.
Facing headwinds, the number of domestic passengers dropped 18% YoY to 35 million, according to ACV. We attribute this decline to aircraft repairs by domestic airlines. We anticipate these issues to be alleviated going forward.
AST’s GPM remained stable QoQ at 60.8% in H1 2024. This margin exceeds the 2019 level of 54%. We attribute this to higher contributions from high-margin food & beverage stores, coupled with a gradual recovery in sales/store.

AST’s H1 2024 results

Source: AST, Vietcap forecast