UBS ups Flughafen Zuerich to 'buy' on several catalysts

Flughafen Zuerich AG

04/12/2024 11:06

** UBS raises Flughafen Zuerich  FHZN.S  to "buy" from
"neutral" seeing sum-of-the-parts valuation (SoTP) upside with
several catalysts for the Swiss airport operator
    ** Among those catalysts, it points to potential increase in
dividend, value crystallisation at Noida airport and an
acceleration in airline capacity allocated to Zurich starting
2026
    ** UBS says it estimates a 60% dividend payout, however it
sees optionality for a higher dividend that could drive
re-rating
    ** "One of the options under discussion is a fixed dividend
+ a variable dividend linked to leverage. We believe this
solution provides flexibility for the company to allow for a
higher payout" - UBS
    ** It adds that over the next months Noida regulatory
framework publication and the opening would allow investors to
start allocating value in the SoTP to this asset, which UBS
values at around 8% of Zurich market cap today
    ** It sees potential for an acceleration in traffic growth
starting 2026 for Zurich, noting that Lufthansa's  LHAG.DE 
subsidiary Swiss is expected to increase its widebody fleet by
34% over the next three years 


 (Reporting by Ozan Ergenay)
 ((ozan.ergenay@thomsonreuters.com))