Beijing Airport/Fund Raising Plan: To Weigh On Stock

Wednesday November 12, 6:10 PM

Beijing Airport/Fund Raising Plan: To Weigh On Stock


HONG KONG (Dow Jones)--Beijing Capital International Airport Co. (0694.HK)
said Wednesday it will announce a fund raising plan toward the end of the
year to finance a 16.7 billion yuan (US$1=CNY8.28) airport expansion.

In late August, the company received approval from authorities to carry
out development that would raise the airport's passenger handling capacity
to 60 million a year by 2008.

"We are likely to announce toward the end of the year details of the fund
raising plan," Company Secretary Shu Yong said.

Shu said part of the CNY16.7 billion needed for the construction will be
sought through this fund raising plan, which may consist of more than one
method.

Beijing Capital International will bear most of the financial
responsibility for the expansion, although it will share some of the cost
with its parent, Beijing Capital Airport Group.

The airport can currently process about 27 million passengers a year, a
figure that is expected to rise to 37 million-40 million by the end of
2004 when refurbishment of an existing terminal is completed.

The expansion project is intended to be completed in time for the 2008
Olympic Games. But even then, analysts forecast the airport's passenger
throughput at 48 million or 80% of its projected capacity that year.

BOCI International analyst Michael Chan wrote last week in a research note
that Beijing Capital International Airport may need to bear responsibility
for as much as CNY13 billion of the total construction cost.

The analyst expects the company to use both debt and equity financing,
such as a domestic share market listing, a move which would dilute its
future earnings per share.

In anticipation of the large spending, coupled with the fact that the
stock has risen quite a bit in recent weeks, Chan has downgraded Beijing
Capital Airport to an underperform from outperform.

The stock closed 2.9% lower Thursday at HK$2.525. It reached a record
closing high of HK$3.00 on Nov. 4, a sharp rise from its lowest closing
level so far this year of HK$1.48 on April 25 amid the severe acute
respiratory syndrome outbreak.

ICEA Securities Asia Ltd. analyst Martson Lai said Beijing Capital
Airport's share price "is expected to head south" due to market concerns
over the investment risk associated with the construction.

Lai noted that the company's management had previously said the investment
risk would be carried by the parent, which holds a 65% stake in the listed
company.

In October, passenger throughput at the airport rose 4.5% on year to 2.9
million, bringing the total number of passengers that used the airport in
the ten months to October to 23.2 million, 15.8% lower compared with the
corresponding period last year.

Aircraft movements rose 10.8% to 24,063 last month, but the accumulative
figure for the ten months to October is still 6.4% lower on year at
202,750.

Aircraft movements for international routes reached 4,140 in October.
While an increase of only 0.1%, it was the first on-year rise since the
outbreak of severe acute respiratory syndrome.

However, passenger numbers from those routes were still 13.6% lower at
541,573.

In September, overall passenger throughput rose 2.4%, while aircraft
movements were up 11.8% on year.

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