Topic: FWAG released its FY ’24 guidance, indicating a solid outlook for the year. Moreover, Dec ’23 traffic results came in slightly better than expected.

Guidance in line with estimates: FWAG expects c. € 970m sales (eNuW: € 965m), at least € 390m EBITDA (eNuW: € 423m) and at least € 210m net income before minorities (eNuW: € 219m).

Solid top-line growth: While FY '23 was still characterized by a strong COVID recovery, it should be hard to maintain that momentum into FY '24. Hence, we model a conservative passenger growth of 1.2% yoy to 38.4m for FY ’24 (vs. Guidance of 39m, +2.3% yoy). On the other hand, due the significant increase in statutory airport fees of 9.7% (as of 1^st January '24; 41% of total sales), FWAG should even turn flat passenger volumes into solid top-line growth (eNuW: 8.8% yoy).

Margins to remain high: FWAG’s continuous focus on operational efficiency is well reflected in strong EBITDA margins (eNuW: 44% for FY ’24e). Nevertheless, we do not see significant potential for margin improvements due to saturation effects. Potential interest rate changes could also lead to P&L effective changes of pension provisions.

CAPEX cycle started: FWAG expects CAPEX to double to more than € 200m (eNuW: € 213m), as the company only recently started to expand its terminal 3 in Q3’23. In total, the southern expansion should be finished by Y/E ’26 and amount to c. € 500m in total CAPEX (eNuW).

Dividend increase likely: Based on the strong net income, but also due to strong cash reserves (eNuW: € 329 at Y/E ’23), no debt and FWAG's ability to finance current CAPEX by CFO, the company might raise the pay-out ratio to 70% (before: 60%), leading to a dividend increase by 81% yoy to € 1.39 per share (eNuW) and to an implied dividend yield of 2.8%.

Also, December traffic results came in better than expected at 2.75m passengers on group level (eNuW: 2.58m), thus successfully finishing off the year with 38m passengers (+26% yoy) on group level.

We reiterate our HOLD recommendation as FWAG’s shares seem fairly valued, but increase our PT to EUR 52.00, as we switch our valuation method from FCFY’24e to DCF to better capture FWAG’s long term outlook.