Topic: FWAG released strong May 2024 traffic results, which came in slightly above our expectations and signal solid ongoing demand for air travel.

Solid passenger growth: In May, group passenger numbers rose by 8% yoy to 3.75m, above our estimate of 3.66m. FWAG's main hub (Vienna airport) experienced a strong increase in passenger traffic of 5.3%, reaching 2.84m passengers (eNuW: 2.81m) and marking a 76% group share. Malta airport's traffic result pose a highlight with superb growth 18% yoy to 0.86m passengers (eNuW: 0.73m) and a 23% group share. The growth is predominantly driven by the island's pull as a tourist destination. On a YTD basis, group passengers are up 10.5% yoy, in line with other European airports (see p.2 for details). On a sidenote, cargo showed a strong recovery of 20% yoy to 26.3m tons mainly driven by the reduced sea freight from East Asia coming through the Suez canal which is compensated by air freight.

Strong summer ahead: May kicked off the busy summer season whose subsequent operating leverage should deliver sound profitability for the second and third quarter. We regard the expected exceedance of last year's summer as highly positive, given that last year's summer showed remarkable passenger dynamics and marks a tough comparable base. While last year's growth was driven by Covid recovery effects, this year's growth should mainly stem from an increase in disposable income in Vienna airport's superb catchment where inflation is well below nominal wage increases. Thus, we expect a strong ongoing summer travel season.

Slowing momentum ahead: Due to the tough comparable base, monthly yoy passenger growth rates should decline for the remainder of the year to an average of 3.4%. However, based on the YTD passenger growth of 10.5% yoy so far, we expect the FY'24e passenger numbers to grow by overall 6% yoy to 40.2m (guidance: c. 39m) (see p. 2).

Albeit current valuation shows a 19% upside to our DCF price target of € 58.00, the peer group analysis (see p. 2) indicates adequately priced shares. While trading on a discount to peers on EV multiples (skewed at FWAG due to the unique net cash position), the equity based PE ratio indicates a premium to peers.

Thus, we reiterate our HOLD recommendation despite ongoing strong operations.