Were the toughest days behind Taseco?

Taseco's lucky cafe chain

Chance to expand network amid pandemic

The airport retail industry has a high entry hurdle, particularly at major airports. As a result, AST's ability to develop its airport retail sectors after FY19 was limit ed. However, while the Covid-19 epidemic has posed significant challenges for the aviation industry, it has also provided possibilities for businesses with solid financial standing, such as AST, to remain resilient and expand its retail network in the face of the pandemic.

Many airport retail enterprises were unsustainable in the 2020-21 period and were acquired by AST. During this difficult period, AST has added 16 new stores, boosting the total number of stores from 92 in 2019 to 108 in 2021 (17.4%). The scalability of AST's retail chain is aided by Taseco Group, AST's parent business, which holds a 40% share in Da Nang International Terminal Investment and Operation JSC (AHT), which operates DIA's international terminal, giving AST an advantage in negotiating advantageous terms to rent space here.

Mr. Nguyen Tien Dung, a VNDirect expert, believes that AST's development in the sector will be slower due to increasingly limit ed expansion space at main airports. As a result, he anticipates AST's store count to grow at a 4.1 percent compound annual growth rate (CAGR) to 127 outlets in FY22-25F. AST has several potential to extend its operations into new terminal airports in the near future, but he hasn't included those in his projection because the projects haven't yet been completed.

Recovery of retail chains

The rise of AST's same-store sales is highly correlated with the growth of Vietnam's overall passenger traffic. As AST focused on extending the souvenir store chain with higher income per store and high exposure to international passengers, Vietnam's total pax climbed at a CAGR of 11.1 percent in FY17-19, while AST's same store sales increased at a CAGR of 27.9%. Because AST's business model is highly dependent on foreign air traffic, sales per store fell to VND1.3 billion in FY20-21. Mr. Nguyen Tien Dung expected AST to gain greatly from the strong recovery of Vietnam total pax in the medium term, with same store sales increasing 303.3 percent yoy in FY22F and increasing at a CAGR of 46.7 percent in FY22-25F.

Mr. Nguyen Tien Dung forecasts AST's revenue to climb 363.2 percent in FY22F and 47.9% CAGR in FY23-25F. In the airport retail segment, he expects AST's retail revenue to increase 413.6 percent yoy in FY22F and increase at a CAGR of 53.0 percent in FY23- 25F, as (1) AST's number of stores may increase at a conservative 4.1 percent CAGR in FY22-25F, and (2) same store sales may increase 303.3 percent yoy in FY22F and increase at a CAGR of 46.7 percent in FY22-25F, thanks to the strong In the hotel segment, AST's hotel revenue may increase 359.0 percent in FY22F and increase at a 20.9 percent CAGR in FY23-25F, with the occupancy rate increasing to 45 percent in FY22F and reaching 50 percent in FY23-25F, with the occupancy rate increasing to 45 percent in FY22F and reaching 50 percent in FY23-25F.

Despite the fact that AST's business has a good chance of recovering in the pandemic phase, Mr. Nguyen Tien Dung sees some key dangers that could jeopardize the company's recovery prospects. First, higher-than-expected fuel prices result in increased airline operating costs, potentially raising ticket prices and reducing demand for air travel. Second, CAAV has proposed a draft plan to establish a domestic flight ticket floor price. If the proposed plan is approved, it might stymie efforts to boost air travel.