Despite significant deterioration of economic situation in Kazakhstan, in 2015 Air Astana managed to record net profit both including and excluding foreign exchange gain. We believe Air Astana to be one of the most prepared for an IPO among all the participants of the state privatisation program at this moment. We estimate fair value of the company in the range of 75-88bn tenge.
2015 financial results. The сompany’s sales decreased by 2.3% YoY to 163.7bn tenge mainly due to 2.0% decrease in revenue from passenger transportation. Operating margin fell down to 2.9% from 10.5% in the previous year, whereas EBITDA margin decreased to 9.2% from 15.4%. Net profit increased almost three times to 10.4bn tenge mainly due to the foreign exchange gain of 11.9bn tenge. Thus, net profit margin in 2015 increased to 6.3% from 2.1% the year before. Adjusted net profit decreased by 89.3% YoY to 1.0bn tenge.
2016 outlook. The company’s management expects air transportation market to remain weak in 2016 because of suppressed demand for airline services in the result of adverse economic situation. Nevertheless, efficient control of expenses and low price level for oil products should help overcoming this complicated period with minimal losses until the expected demand recovery in 2017.
Preparation for IPO. We evaluate the company’s readiness for public listing as high: as of today, Air Astana demonstrates professional approach to interaction with the market (regular publiсation of financial results, annual reports, company news, press conferences by the management). Despite this, the company’s president believes that public listing would most likely occur after the launch of Astana International Financial Center in 2018. At the moment, main issue to be resolved on the way to IPO, is a potential shareholding structure taking into account requirements of compulsory government control and related covenants from leasing contracts.
Fair value estimate. According to our valuation, Air Astana’s fair value arrives at 88bn tenge using DCF method, and equals to 75bn based on the results of comparative analysis.