Daily ShareChat: Auckland Airport

By Jenny Ruth

Thursday 19th May 2011

While the Rugby World Cup will significantly boost Auckland International Airport's revenues and earnings in the year ending June 2012, a number of initiatives the company has undertaken recently will provide good growth momentum, says Nachiket Moghe, an analyst at Aegis Equities Research which is owned by Morningstar.

"Management is actively engaging with aircrafts and is looking at ways and means to increase passenger capacity out of Auckland and stem market share loss to Christchurch," Moghe says.

"It has been quite successful of late in enticing major trans-Tasman and some long-haul carriers to Auckland which is expected to spur growth over the next few years," he says.

While the airport has also invested in other airports to foster growth and develop routs to these destinations from Auckland, "we, however, don't believe the company will adopt this strategy often."

Moghe also sees growth opportunities in developing the airport's commercial property portfolio, taking advantage of its massive land bank. "Pent up demand from multinational firms involved in freight, logistics and transportation businesses should spur developmental activity and, in turn, drive rental growth."

On the retail front, "an exponential increase in the number of high-spending Asian tourists and their desire to visit duty free stores offers space expansion opportunities. Retail spend per passenger is on the rise and this trend is expected to continue over the foreseeable future."

Recommendation: Hold (raised from Reduce).

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