China / Hong Kong Company Guide

Beijing Capital Intl Airport

Version 5 | Bloomberg: 694 HK EQUITY | Reuters: 0694.HK
Refer to important disclosures at the end of this report

DBS Group Research . Equity 5 Sep 2017

BUY New airport impact merely a blip

Last Traded Price ( 5 Sep 2017):HK$13.18 (HSI : 27,741)
Price Target 12-mth: HK$16.00 (21% upside) (Prev HK$10.70) Maintain BUY with higher TP of HK$16, after factoring in
increased concession revenues and impact from the new airport.
Analyst
We see BCIA as an attractive stock to own given the strong
Paul YONG CFA +65 6682 3712
paulyong@dbs.com earnings growth outlook on an expected substantial
improvement in revenue sharing with duty-free operators from
What’s New 2018 onwards. This is even after we have conservatively
 29% EPS CAGR projected over FY16-19F on higher factored in a substantial drop in its earnings in 2020F on the
retail concession income and airport fees opening of Beijing Daxing International Airport.
 Balance sheet to be debt-free by end-2019F
Where we differ: We have factored in a 26-27% drop in
 Even factoring in the opening of the new airport passenger throughput and aircraft movements in 2020F for
in September 2019, BCIA remains attractive BCIA on the expected opening of Daxing Airport in September
2019, with a 4-5% per year recovery from 2021F-2026F in
 Maintain BUY, TP raised to HK$16
aircraft movements and passenger traffic, in our DCF valuation.
Price Relative
HK$ Relative Index
Potential catalysts: BCIA’s share price should re-rate on strong
14.5 223 earnings delivery, while clarity on BCIA’s involvement in Beijing
12.5
203
Daxing International Airport is also a potential catalyst.
183
10.5
163

8.5 143 We are raising our net profit forecasts for FY17F and FY18F by
24% and 47% to RMB2,326m and RMB3,047m respectively.
123
6.5
103

4.5 83 We believe there is upside risk to our FY18F numbers if the

Sep-13 Sep-14 Sep-15 Sep-16 Sep-17
new DFS concessions are effected earlier than July 2018.
Beijing Capital Intl Airport (LHS) Relative HSI (RHS)

Forecasts and Valuation Valuation:

FY Dec (RMB m) 2016A 2017F 2018F 2019F DCF-based target price of HK$16. Our target price for BCIA is
Turnover 8,678 9,454 10,622 11,828 based on discounted cash flows, and assumes WACC of 7.1%
EBITDA 4,450 4,796 5,706 6,708
and terminal growth rate of 1%.
Pre-tax Profit 2,377 3,158 4,066 5,094
Net Profit 1,781 2,366 3,047 3,817
Net Pft (Pre Ex) 1,935 2,326 3,047 3,817 Key Risks to Our View:
Net Profit Gth (Pre-ex) (%) 8.9 20.3 31.0 25.3 Impact from new airport could be more negative than
EPS (RMB) 0.41 0.55 0.70 0.88 expected. We have factored in a >25% decline in passenger
EPS (HK$) 0.49 0.65 0.84 1.06
Core EPS (RMB) 0.45 0.54 0.70 0.88 throughput and aircraft movements for BCIA when the new
Core EPS (HK$) 0.54 0.64 0.84 1.06 airport opens, but the impact could be more than expected.
Core EPS Gth (%) 8.9 20.3 31.0 25.3
DPS (HK$) 0.20 0.26 0.34 0.42 At A Glance
BV Per Share (HK$) 5.36 5.76 6.26 6.89 Issued Capital - H shares (m shs) 1,879
Core PE (X) 24.6 20.5 15.6 12.5 - Non H shares (m 2,452
EV/EBITDA (X) 12.1 10.9 8.8 7.1 H shs as a % of Total 43
Net Div Yield (%) 1.5 2.0 2.6 3.2 Total Mkt. Cap (HK$m/US$m) 57,081 / 7,295
P/Book Value (X) 2.5 2.3 2.1 1.9 Major Shareholders
Net Debt/Equity (X) 0.3 0.2 0.1 0.0 Capital Airports Holding (%) 56.6
ROAE (%) 9.5 11.8 14.0 16.1 Major H Shareholders
Chow Tai Fook Capital Ltd. (%) 23.9
Earnings Rev (%): 24 47 New
Artio Global Management LLC (%) 9.0
Consensus EPS (RMB) 0.55 0.74 0.73
BlackRock, Inc. (%) 5.3
Other Broker Recs: B: 8 S: 3 H: 6
Aberdeen Asset Management Plc (%) 5.1
Source of all data on this page: Company, DBSV, Thomson Reuters, H Shares-Free Float (%) 56.7
HKEX 3m Avg. Daily Val. (US$m) 7.0
ICB Industry : Industrials / Industrial Transportation

ed-TH / sa- AH
Company Guide
Beijing Capital Intl Airport

WHAT’S NEW Imputing a base-case scenario for when Beijing’s new

Factoring in higher concession revenues from mid-2018
onwards following DFS tender
Huge boost for retail concession income following T2 and T3
tender results: It was announced in July that BCIA’s duty-free
concession tenders for T2 and T3 had been won by China
Duty Free Group (CDFG) and Sunrise Duty Free (China)
respectively. Furthermore, the new concessions reportedly
come with a first-year guaranteed rental of RMB830m for T2
and RMB2.2bn for T3, with a commission sharing rate of
47.5% and 43% for T2 and T3 respectively – a significant
improvement from c.22% currently.
international airport (Daxing) opens in September 2019.
Beijing Daxing International Airport looking to commence
operations in September 2019: Beijing Daxing Airport recently
announced that its terminal steel structure topped out on 30
June 2017, with main construction to be completed by end-
2018, and operations to commence in September 2019.
Most reports have the project on track to meet the
September 2019 opening and we believe that the new airport
should be fully operational by the start of 2020.
Market Share by Seats at Beijing Capital Airport*

Non-aeronautical revenue to exceed aeronautical revenue by

FY18: Assuming the new concessions kick in from 2H18
onwards, we project non-aeronautical revenue to grow from
c. RMB4.4bn in FY17F to c. RMB5.4bn in FY18F, and
RMB6.5bn in FY19F. Non-aeronautical revenue will thus make
up 51% of total revenue in FY18F and 55% in FY19F.

Segmental revenue forecasts for BCIA (RMB m)

7,000

6,000
Source: CAPA, *For the week commencing 4 Sep 2017
5,000
China Eastern Airlines and China Southern Airlines to move
4,000 to Daxing; Air China to stay put: With the opening of Daxing
Airport, China Eastern and China Southern will move over to
3,000
this new airport while Air China will stay put. Along with
2,000 other SkyTeam members, about 31% of BCIA’s current
passenger throughput could move over to Daxing. Based on
1,000 data from CAPA, SkyTeam has c. 37% share of domestic
flights and 14.4% share of international flights at BCIA.
0
Market Share by Seats at Beijing Capital Airport*

oneworld U-FLY Alliance Value Alliance Star Alliance

Aeronautical Revenue Non-aeronautical revenue (affiliate) 0.2% 0.1% (connecting
1.1% partner)
0.1%
Source: Company, DBS Bank estimates Unaligned
SkyTeam 19.8%
30.9%
Higher airport fees from April 2017 also a positive. With a
new airport tariff standard taking effect from 1 April 2017
onwards, we expect BCIA to see up to 10% increase in its
average airport fees (per aircraft), which will help boost its Star Alliance
45.6%
aeronautical revenues.
oneworld
2.3%

Raising FY17F/FY18F net profits by 24%/47%. As a result, we

are raising our net profit forecasts for FY17F and FY18F by
24% and 47% to RMB2,326m and RMB3,047m respectively.
We believe there is upside risk to our FY18F numbers if the Source: CAPA, *For the week commencing 4 Sep 2017
new DFS concessions are effected earlier than July 2018.

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 Company Guide
Beijing Capital Intl Airport

What this means for Beijing Capital International Airport…
With SkyTeam members set to move to Daxing Airport once it
opens, Beijing Capital Airport is bound to see a drop in
passenger throughput. SkyTeam members currently have an
estimated share of domestic flights of 37%, and 14.4% of
international flights at BCIA, and we input a 32% drop in
domestic passenger throughput and 10% drop in
international passenger throughput in 2020 to factor in
Daxing Airport’s opening.
Subsequently, we project domestic passenger throughput to
grow at 3% per annum between 2020 and 2026, and for
international passenger throughput to increase at 8% per
annum over the same period. Aircraft movements are
assumed to grow at the same rate.
Passenger throughput (m pax) at Beijing Capital Airport
traffic, which is more lucrative. As a result, we see the share
of international passengers at Beijing Capital Airport rising to
40% or more in the longer term.
… and for Beijing Daxing International Airport. Assuming c.
10% passenger growth for SkyTeam airlines that move to
Daxing Airport in 2020, this works out to be over 28m
passengers for Daxing Airport in its first full year of operations,
against a capacity of 45m passengers. This figure is likely to
be conservative given years of pent-up demand for flights
into Beijing, and we will not be surprised if it takes only a few
years for Daxing Airport to reach full capacity by 2025, when
its capacity is slated for expansion to 70m passengers (if
Daxing Airport handles 28m passengers in 2020F, it will reach
45m passengers by 2025F with an annual growth rate of
10% - not a far stretch of the imagination).
BCIA’s strong balance sheet position can help fund a
potential acquisition of Daxing Airport eventually. Backed by
strong free cash flow generation, we project BCIA to be
nearly debt-free by end-2019, with shareholders’ equity of c.
RMB25bn. Meanwhile, Beijing Daxing International Airport is
expected to cost RMB80bn in total (100m passengers), and
we estimate phase 1 of the project (45m passengers) could
cost around RMB50bn (c. 60% of total cost). Hence, BCIA
should be in a strong position to acquire Daxing Airport
within a few years of its opening (assuming Daxing Airport is
attractive to acquire from a returns perspective), given that
the ultimate owner of both BCIA and Daxing Airport (the Civil
Aviation Administration of China) would require funding for
the further development of Daxing Airport.

TP of HK$16 after factoring in Daxing Airport disruption.

Source: Company, DBS Bank estimates Factoring in BCIA’s drop in EBIT in 2020 and gradual recovery
in the years after, we derive a TP of HK$16 for the stock
International passenger traffic could see greater share at based on a WACC of 7.1% and terminal growth rate of 1%.
Beijing Capital Airport. With more slots opening up following
SkyTeam’s expected move to Daxing, we expect BCIA to
continue its focus on growing its international passenger

Discounted Cash Flow Valuation for BCIA (WACC of 7.1%, Terminal growth rate of 1% post 2026F)
FYE De c 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 T.V.
RMB mn

EBIT 3,393 4,275 5,230 3,110 3,317 3,538 3,776 4,031 4,305 4,599
Plus: D&A 1,394 1,421 1,467 1,467 1,502 1,536 1,570 1,604 1,638 1,673
Less: tax payable on EBIT (848) (1,069) (1,308) (778) (829) (885) (944) (1,008) (1,076) (1,150)
Plus: working capital chg (2) 5 (19) 0 0 0 0 0 0 0
Less: capex (1,315) (1,115) (1,116) (650) (650) (650) (650) (650) (650) (650)

Free Cash flow 2,622 3,518 4,255 3,150 3,339 3,540 3,752 3,978 4,217 4,472 74,285
NPV of FCF 2,622 3,285 3,711 2,566 2,540 2,514 2,489 2,464 2,440 2,416 37,482

Net (debt) at end 2016 (6273)

T.P. p e r s h a re (HK$ ) 1 6 .0 0

Source: DBS Bank estimates

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Company Guide
Beijing Capital Intl Airport

Interim Income Statement (RMBm)

FY Dec 1H2016 2H2016 1H2017 % chg yoy % chg hoh

Revenue 4,197 4,481 4,614 9.9 3.0

Cost of Goods Sold (2,752) (3,035) (2,857) 3.8 (5.9)
Gross Profit 1,446 1,446 1,757 21.5 21.5
Other Oper. (Exp)/Inc 0.0 0.0 0.0 nm nm
Operating Profit 1,446 1,446 1,757 21.5 21.5
Other Non Opg (Exp)/Inc 1.92 0.78 2.30 19.8 194.3
Associates & JV Inc 2.88 2.74 (1.4) nm (151.5)
Net Interest (Exp)/Inc (195) (174) (120) 38.5 30.9
Exceptional Gain/(Loss) (47.3) (106) 49.4 nm (146.5)
Pre-tax Profit 1,208 1,169 1,687 39.7 44.3
Tax (303) (293) (423) 39.8 44.3
Minority Interest 0.0 0.0 0.0 nm nm
Net Profit 905 876 1,264 39.6 44.4
Net profit bef Except. 941 955 1,227 30.4 28.4
EBITDA 2,251 2,199 2,467 9.6 12.2
Margins (%)
Gross Margins 34.4 32.3 38.1
Opg Profit Margins 34.4 32.3 38.1
Net Profit Margins 21.6 19.5 27.4

Source of all data: Company, DBS Vickers

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 Company Guide
Beijing Capital Intl Airport

CRITICAL FACTORS TO WATCH Aircraft movement growth (%)

2.7
2.72
Higher airport fees along with modest growth in aircraft 2.33
movements and throughput underpin aeronautical revenues. 1.95
1.71 1.72
Aeronautical revenue made up c. 55% of total net revenue in 1.56 1.41
FY16, and consisted of 1) passenger charges, 2) aircraft
1.17
movements and related charges, and 3) airport fees. These 0.69
0.78
components made up 39%, 36% and 25% of total
0.39
aeronautical revenue respectively.
0.00
2015A 2016A 2017F 2018F 2019F
With a new airport tariff standard taking effect from 1 April Passenger throughput growth (%)
2017 onwards, we expect BCIA to see up to 10% increase in 5.0
5.05
its average airport fees (per aircraft). Along with modest 4.4
growth in aircraft movements and passenger throughput, we 4.04

project aeronautical revenue growth of 5.3% in 2017F, and

3.03
2.3% per annum in FY18F and FY19F.
2.1 2.1
2.02 1.7
Meanwhile, BCIA is expected to continue with its strategy of
1.01
improving the passenger throughput mix towards international
travellers, which generate higher aeronautical and non- 0.00
2015A 2016A 2017F 2018F 2019F
aeronautical revenue per pax.
Aeronautical revenue

Non-aeronautical revenues get a boost from higher concession 5,085.8 5,203.9 5,326.1
4,829.2
income. Non-aeronautical revenue includes revenue from 1) 4,585.9
4,346
concessions (from retailing, advertising, restaurants and food
shops, ground handling, VIP service and others), 2) rentals, 3) 3,260

car park charges and others. Among these, the larger revenue 2,173
contributors are retailing, advertising, and rentals, which each
making up over a quarter of total non-aeronautical revenue in 1,087

2016. 0
2015A 2016A 2017F 2018F 2019F

It was announced in July 2017 that BCIA’s retail concession Non-Aeronautical revenue
will receive a significant boost in revenue following the tender 6,502

of its duty-free concessions in T2 and T3. Assuming the new 5,418

concessions kick in from 2H18 onwards, we project non- 5,254
4,368
aeronautical revenue to grow from c. RMB4.4bn in FY17F to c. 3,940 3,801 3,849

RMB5.4bn in FY18F, and RMB6.5bn in FY19F. Non-

2,627
aeronautical revenue will thus make up 51% of total revenue
in FY18F and 55% in FY19F. 1,313

0
EBIT CAGR of 22% over FY16-FY19F. Driven by firm top-line 2015A 2016A 2017F 2018F 2019F
growth as described above, and relatively stable operating
BCIA’s net debt position (RMB m)
costs, we project BCIA’s EBIT to grow from RMB2.9bn in 2016
20,000
to RMB5.2bn by 2019F. 17,775
18,000 16,003
16,000
13,772.8
Lower interest costs to further boost profits. We expect BCIA’s 14,000
11,807
interest costs to continue declining as it pays down loans using 12,000 10,028 9,570
internally generated cash. We project BCIA to be nearly debt- 10,000
8,000
free by end-2019F. The continued lower finance costs should 6,273
6,000 4,782
boost BCIA’s net earnings to grow at a 19% CAGR over 2016-
4,000 2,649
2019F, to RMB3.8bn by 2019F. 2,000 33
0
2010A2011A2012A2013A2014A2015A2016A 2017F 2018F 2019F

Source: Company, DBS Vickers

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Company Guide
Beijing Capital Intl Airport

Appendix 1: A look at Company's listed history – what drives its share price?

BCIA's share price performance vs. H-shares index over the last 10 years

Source: Thomson Reutuers, DBS Bank Estimates

BCIA Price-to-Book vs ROE

Source: ThomsonReutuers, DBS Bank Estimates

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 Company Guide
Beijing Capital Intl Airport

Leverage & Asset Turnover (x)

0.4
Balance Sheet: 0.70
0.4
Net gearing to improve on positive free cash flow generation. 0.60 0.4
Taking into account a modest capital expenditure programme 0.50
0.3

of RMB1.0-1.2bn in the next few years, and coupled with 0.40

0.3
0.3
steadily growing earnings and cash flow, we project BCIA’s net 0.30 0.3
gearing to improve from 0.3x in 2016 (from 0.5x in 2015) to 0.20
0.3

0.1x by end-2018F, and to be debt-free by end-2019F. 0.10

0.2
0.2
0.00 0.2
Share Price Drivers: 2015A 2016A 2017F 2018F 2019F
Gross Debt to Equity (LHS) Asset Turnover (RHS)
DCF-based target price of HK$16. Our target price for BCIA is
Capital Expenditure
based on discounted cash flows, and assumes WACC of 7.1% RMBm
and terminal growth rate of 1%. 3,000.0

2,500.0

Improving earnings and ROE to re-rate share price. We see 2,000.0

BCIA’s share price re-rating towards our target price of HK$16 1,500.0
as the company continues to deliver on its earnings. 1,000.0

500.0
Second Beijing airport a longer-term catalyst. With Beijing’s
0.0
second airport slated to be opened in September 2019, which 2015A 2016A 2017F 2018F 2019F

would cater for longer-term air traffic growth in Beijing, a Capital Expenditure (-)

subsequent potential asset injection of the second airport by ROE

16.0%
BCIA’s parent company could prove beneficial to BCIA - at the
14.0%
right price and at the right time
12.0%

10.0%
Key Risks:
8.0%
Capacity bottleneck restrains growth. Beijing Airport has
6.0%
already reached/exceeded its design capacity (over 94m
4.0%
passengers handled in 2016 vs capacity of c. 80m) and is
2.0%
currently facing constraints in growing its passenger
0.0%
throughput, which would limit its revenue growth potential 2015A 2016A 2017F 2018F 2019F

over the next few years. Additionally, the airspace around Forward PE Band
Beijing is tightly controlled and BCIA's growth could be limited (x)
if airspace restrictions are not relaxed when there is demand. 18.7
17.7
+2sd: 17.4x
16.7
Overpaying for acquisitions. There is a risk that BCIA will 15.7 +1sd: 15.7x
overpay for any acquisition and lead to lower returns for 14.7
Avg: 14.1x
shareholders. 13.7
12.7
‐1sd: 12.5x
11.7
Company Background 10.7 ‐2sd: 10.9x
Beijing Capital International Airport (BCIA) owns and operates 9.7
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17
Beijing Capital Airport, which is the busiest airport in Asia in
terms of passenger throughput, and the second busiest in the PB Band
(x)
world. Its revenue streams are segmented into aeronautical 2.6

revenues (passenger charges, airport movement fees and 2.4

airport fees) and non-aeronautical (concessions, rentals and 2.2

+2sd: 2.14x
car park) revenues. It is over 56% owned by the government. 2.0
+1sd: 1.83x
1.8

1.6
Avg: 1.52x
1.4

1.2 ‐1sd: 1.21x
1.0
‐2sd: 0.89x
0.8
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17

Source: Company, DBS Vickers

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Company Guide
Beijing Capital Intl Airport

Key Assumptions
FY Dec 2015A 2016A 2017F 2018F 2019F
Aircraft movement growth (%) 1.4 2.7 0.7 1.7 1.7
Passenger throughput growth (%) 4.4 5.0 1.7 2.1 2.1
Aeronautical revenue (RMB m) 4,585.9 4,829.2 5,085.8 5,203.9 5,326.1
Non-Aeronautical revenue (RMB m) 3,801.3 3,848.6 4,368.0 5,418.0 6,502.3
Source: Company, DBS Vickers

Segmental Breakdown (RMB m)

FY Dec 2015A 2016A 2017F 2018F 2019F
Revenues (RMB m)
Aeronautical 4,586 4,829 5,086 5,204 5,326
Non-Aeronautical 3,801 3,849 4,368 5,418 6,502
Total 8,387 8,678 9,454 10,622 11,828
Source: Company, DBS Vickers

Income Statement (RMB m)

FY Dec 2015A 2016A 2017F 2018F 2019F
Revenue 8,387 8,678 9,454 10,622 11,828
Cost of Goods Sold (5,603) (5,786) (6,061) (6,347) (6,598)
Gross Profit 2,784 2,891 3,393 4,275 5,230
Other Opng (Exp)/Inc 0 0 0 0 0
Operating Profit 2,784 2,891 3,393 4,275 5,230
Other Non Opg (Exp)/Inc 15 3 3 3 3
Associates & JV Inc 8 6 6 7 7
Net Interest (Exp)/Inc (479) (369) (284) (218) (146)
Dividend Income 0 0 0 0 0
Exceptional Gain/(Loss) (135) (154) 40 0 0
Pre-tax Profit 2,193 2,377 3,158 4,066 5,094
Tax (551) (596) (792) (1,019) (1,277)
Minority Interest 0 0 0 0 0
Preference Dividend 0 0 0 0 0
Net Profit 1,642 1,781 2,366 3,047 3,817
Net Profit before Except. 1,777 1,935 2,326 3,047 3,817
EBITDA 4,400 4,450 4,796 5,706 6,708
Growth
Revenue Gth (%) 11.0 3.5 8.9 12.4 11.4
EBITDA Gth (%) 14.2 1.1 7.8 19.0 17.6
Opg Profit Gth (%) 16.7 3.9 17.4 26.0 22.4
Net Profit Gth (%) 18.0 8.5 32.9 28.8 25.3
Margins & Ratio
Gross Margins (%) 33.2 33.3 35.9 40.2 44.2
Opg Profit Margin (%) 33.2 33.3 35.9 40.2 44.2
Net Profit Margin (%) 19.6 20.5 25.0 28.7 32.3
ROAE (%) 9.3 9.5 11.8 14.0 16.1
ROA (%) 5.1 5.3 7.1 9.3 11.8
ROCE (%) 7.0 7.2 8.5 11.1 13.7
Div Payout Ratio (%) 40.0 40.0 40.0 40.0 40.0
Net Interest Cover (x) 5.8 7.8 11.9 19.6 35.7
Source: Company, DBS Vickers

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 Company Guide
Beijing Capital Intl Airport

Interim Income Statement (RMB m)

FY Dec 1H2015 2H2015 1H2016 2H2016 1H2017

Revenue 4,095 4,293 4,197 4,481 4,614

Cost of Goods Sold (2,750) (2,853) (2,752) (3,035) (2,857)
Gross Profit 1,345 1,439 1,446 1,446 1,757
Other Oper. (Exp)/Inc 0 0 0 0 0
Operating Profit 1,345 1,439 1,446 1,446 1,757
Other Non Opg (Exp)/Inc 9 6 2 1 2
Associates & JV Inc 3 5 3 3 (1)
Net Interest (Exp)/Inc (251) (227) (195) (174) (120)
Exceptional Gain/(Loss) 1 (136) (47) (106) 49
Pre-tax Profit 1,106 1,087 1,208 1,169 1,687
Tax (279) (272) (303) (293) (423)
Minority Interest 0 0 0 0 0
Net Profit 827 815 905 876 1,264
Net profit bef Except. 826 917 941 955 1,227

Growth
Revenue Gth (%) 12.2 9.8 2.5 4.4 9.9
Opg Profit Gth (%) 12.5 21.0 7.5 0.5 21.5
Net Profit Gth (%) 22.0 14.2 9.5 7.5 39.6

Margins
Gross Margins (%) 32.8 33.5 34.4 32.3 38.1
Opg Profit Margins (%) 32.8 33.5 34.4 32.3 38.1
Net Profit Margins (%) 20.2 19.0 21.6 19.5 27.4
Source: Company, DBS Vickers

Balance Sheet (RMB m)

FY Dec 2015A 2016A 2017F 2018F 2019F

Net Fixed Assets 27,750 26,629 26,611 26,341 26,025

Invts in Associates & JVs 53 53 59 66 73
Other LT Assets 1,384 1,403 1,342 1,305 1,269
Cash & ST Invts 2,113 4,530 3,521 3,154 3,270
Inventory 0 0 0 0 0
Debtors 1,266 1,139 1,182 1,328 1,479
Other Current Assets 126 150 150 150 150
Total Assets 32,691 33,904 32,865 32,344 32,267
ST Debt 4,645 5,670 4,670 3,670 2,670
Creditors 2,216 3,149 3,190 3,341 3,473
Other Current Liab 391 387 387 387 387
LT Debt 7,038 5,133 3,633 2,133 633
Other LT Liabilities 132 187 187 187 187
Shareholder’s Equity 18,269 19,378 20,798 22,626 24,917
Minority Interests 0 0 0 0 0
Total Cap. & Liab. 32,691 33,904 32,865 32,344 32,267

Non-Cash Wkg. Capital (1,216) (2,247) (2,244) (2,249) (2,231)

Net Cash/(Debt) (9,570) (6,273) (4,782) (2,649) (33)
Debtors Turn (avg days) 57.8 50.6 44.8 43.1 43.3
Creditors Turn (avg days) 188.6 231.1 247.9 241.9 242.4
Inventory Turn (avg days) N/A N/A N/A N/A N/A
Asset Turnover (x) 0.3 0.3 0.3 0.3 0.4
Current Ratio (x) 0.5 0.6 0.6 0.6 0.8
Quick Ratio (x) 0.5 0.6 0.6 0.6 0.7
Net Debt/Equity (X) 0.5 0.3 0.2 0.1 0.0
Net Debt/Equity ex MI (X) 0.5 0.3 0.2 0.1 0.0
Capex to Debt (%) 20.6 4.3 15.8 19.2 33.8
Z-Score (X) 2.6 2.7 3.1 3.8 3.8
Source: Company, DBS Vickers

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 Company Guide
Beijing Capital Intl Airport

Cash Flow Statement (RMB m)

FY Dec 2015A 2016A 2017F 2018F 2019F

Pre-Tax Profit 2,193 2,377 3,158 4,066 5,094

Dep. & Amort. 1,593 1,550 1,394 1,421 1,467
Tax Paid (551) (596) (792) (1,019) (1,277)
Assoc. & JV Inc/(loss) (8) (6) (6) (7) (7)
(Pft)/ Loss on disposal of FAs 0 0 0 0 0
Chg in Wkg.Cap. 356 1,030 (2) 5 (19)
Other Operating CF 574 255 0 0 0
Net Operating CF 4,157 4,610 3,752 4,466 5,259
Capital Exp.(net) (2,406) (463) (1,315) (1,115) (1,116)
Other Invts.(net) 0 0 0 0 0
Invts in Assoc. & JV 0 0 0 0 0
Div from Assoc & JV 0 0 0 0 0
Other Investing CF 0 324 0 0 0
Net Investing CF (2,406) (139) (1,315) (1,115) (1,116)
Div Paid (602) (712) (947) (1,219) (1,527)
Chg in Gross Debt (529) (880) (2,500) (2,500) (2,500)
Capital Issues 0 0 0 0 0
Other Financing CF (696) 1 0 0 0
Net Financing CF (1,827) (2,052) (3,447) (3,719) (4,027)
Currency Adjustments 4 (1) 0 0 0
Chg in Cash (71) 2,418 (1,009) (367) 116
Opg CFPS (RMB) 0.88 0.83 0.87 1.03 1.22
Free CFPS (RMB) 0.40 0.96 0.56 0.77 0.96

Source: Company, DBS Vickers

Target Price & Ratings History

S.No. Dat e Closing 12- mt h Rat ing

HK$
Pric e T arget
14.0 Pric e
13.0 1: 22-Mar-17 HK$9.49 HK$10.70 Buy
2:
12.0
11.0 1

10.0
9.0
8.0
7.0
Mar-17
Sep-16

Sep-17
Jan-17
Dec-16

Jun-17
May-17
Nov-16

Jul-17
Oct-16

Feb-17

Apr-17

Aug-17

Source: DBS Vickers

Analyst: Paul YONG CFA

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DBSVHK recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends

Completed Date: 5 Sep 2017 17:30:07 (HKT)

Dissemination Date: 5 Sep 2017 18:02:43 (HKT)

Sources for all charts and tables are DBS Vickers unless otherwise specified.

GENERAL DISCLOSURE/DISCLAIMER

This report is prepared by DBS Vickers (Hong Kong) Limited (“DBSV HK”). This report is solely intended for the clients of DBS Bank Ltd., DBS Bank
(Hong Kong) Limited (DBS HK), DBSV HK, and DBS Vickers Securities (Singapore) Pte Ltd. (“DBSVS”), its respective connected and associated
corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii)
redistributed without the prior written consent of DBSV HK.

The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS
Bank Ltd., DBS HK, DBSV HK, DBSVS, its respective connected and associated corporations, affiliates and their respective directors, officers,
employees and agents (collectively, the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or
sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we
do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions
expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained in this document
does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is
for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain
separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss
(including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation
to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along
with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document.
The DBS Group, may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform
broking, investment banking and other banking services for these companies.

Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can
be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments.
The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may
not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to
update the information in this report.

This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned
schedule or frequency for updating research publication relating to any issuer.

The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and
assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on
which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual
results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED
UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:
(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and
(b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk
assessments stated therein.

Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.
Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)
mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the
commodity referred to in this report.

DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public
offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage
in market-making.

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Beijing Capital Intl Airport

ANALYST CERTIFICATION
The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the
companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her
compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s)
1
primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate does not serve as an officer of
the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the
real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the
management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or
2
his associate does not have financial interests in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has
procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of
research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment
banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment
banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the
DBS Group.

COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. DBS Bank Ltd, DBS HK, DBSVS, DBSV HK or their subsidiaries and/or other affiliates have a proprietary position in Beijing Capital
International Airport (694 HK) recommended in this report as of 01 Sep 2017.

2. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this
Research Report.

3. Compensation for investment banking services:

DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities
as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to
obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security
discussed in this document should contact DBSVUSA exclusively.

4. Disclosure of previous investment recommendation produced:

DBS Bank Ltd, DBSVS, DBSVHK, their subsidiaries and/or other affiliates of DBSVUSA may have published other investment
recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12
months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations
published by DBS Bank Ltd, DBSVHK, their subsidiaries and/or other affiliates of DBSVUSA in the preceding 12 months.

1
An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of
which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person
accustomed or obliged to act in accordance with the directions or instructions of the analyst.
2
Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or
a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This
term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or
new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

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Beijing Capital Intl Airport

RESTRICTIONS ON DISTRIBUTION
General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or
located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be
contrary to law or regulation.
Australia This report is being distributed in Australia by DBS Bank Ltd. (“DBS”) or DBS Vickers Securities (Singapore) Pte Ltd
(“DBSVS”). DBS holds Australian Financial Services Licence no. 475946.
DBSVS is exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001
(“CA”) in respect of financial services provided to the recipients. Both DBS and DBSVS are regulated by the Monetary
Authority of Singapore under the laws of Singapore, and DBSVHK is regulated by the Securities and Futures Commission of
Hong Kong under the laws of Hong Kong, which differ from Australian laws.
Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong This report is being distributed in Hong Kong by DBS Bank Ltd, DBS Bank (Hong Kong) Limited and DBS Vickers (Hong Kong)
Limited, all of which are registered with or licensed by the Hong Kong Securities and Futures Commission to carry out the
regulated activity of advising on securities.
Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia.
Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from
ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this
report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised
that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected
and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any
of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek
to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also
have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and
other services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No.
198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the
Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign
entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial
Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert
Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons
only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from,
or in connection with the report.
Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are only
intended for institutional clients only and no other person may act upon it.
United This report is produced by DBSVHK which is regulated by the Hong Kong Securities and Futures Commission
Kingdom
This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd (“DBSVUK”). DBSVUK is authorised
and regulated by the Financial Conduct Authority in the United Kingdom.
In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and
associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any
form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at
persons having professional experience in matters relating to investments. Any investment activity following from this
communication will only be engaged in with such persons. Persons who do not have professional experience in matters
relating to investments should not rely on this communication.
rd
Dubai This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3 Floor,
International Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank
Financial Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for
Centre professional clients (as defined in the DFSA rulebook) and no other person may act upon it.
United Arab This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined
Emirates in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes
only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell
any financial product. It does not constitute a personal recommendation or take into account the particular investment
objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment
adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the
information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This
report or any portion thereof may not be reprinted, sold or redistributed without our written consent.

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Company Guide
Beijing Capital Intl Airport

United States This report was prepared by DBSVHK. DBSVUSA did not participate in its preparation. The research analyst(s) named on
this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research
analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company,
public appearances and trading securities held by a research analyst. This report is being distributed in the United States by
DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional
Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may
authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should
contact DBSVUSA directly and not its affiliate.
Other In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,
jurisdictions professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.
DBS Vickers (Hong Kong) Limited
th
18 Floor Man Yee building, 68 Des Voeux Road Central, Central, Hong Kong
Tel: (852) 2820-4888, Fax: (852) 2868-1523
Company Regn. No. 31758

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 Company Guide
Beijing Capital Intl Airport

DBS Regional Research Offices

HONG KONG MALAYSIA SINGAPORE

DBS Vickers (Hong Kong) Ltd AllianceDBS Research Sdn Bhd DBS Bank Ltd
Contact: Carol Wu Contact: Wong Ming Tek (128540 U) Contact: Janice Chua
18th Floor Man Yee Building 19th Floor, Menara Multi-Purpose, 12 Marina Boulevard,
68 Des Voeux Road Central Capital Square, Marina Bay Financial Centre Tower 3
Central, Hong Kong 8 Jalan Munshi Abdullah 50100 Singapore 018982
Tel: 852 2820 4888 Kuala Lumpur, Malaysia. Tel: 65 6878 8888
Fax: 852 2863 1523 Tel.: 603 2604 3333 Fax: 65 65353 418
e-mail: dbsvhk@dbs.com Fax: 603 2604 3921 e-mail: equityresearch@dbs.com
Participant of the Stock Exchange of Hong Kong Ltd e-mail: general@alliancedbs.com Company Regn. No. 196800306E

INDONESIA THAILAND
PT DBS Vickers Sekuritas (Indonesia) DBS Vickers Securities (Thailand) Co Ltd
Contact: Maynard Priajaya Arif Contact: Chanpen Sirithanarattanakul
DBS Bank Tower 989 Siam Piwat Tower Building,
Ciputra World 1, 32/F 9th, 14th-15th Floor
Jl. Prof. Dr. Satrio Kav. 3-5 Rama 1 Road, Pathumwan,
Jakarta 12940, Indonesia Bangkok Thailand 10330
Tel: 62 21 3003 4900 Tel. 66 2 657 7831
Fax: 6221 3003 4943 Fax: 66 2 658 1269
e-mail: research@id.dbsvickers.com e-mail: research@th.dbsvickers.com
Company Regn. No 0105539127012
Securities and Exchange Commission, Thailand

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