Kenanga Research keeps Underperform rating on MAHB

  • Business
  • Wednesday, 06 May 2015

KUALA LUMPUR: Kenanga Investment Research has maintained its Underperform call on MAHB with a lower target price of RM6.18 following its downward revision in earnings.

In a note on Wednesday, the group said outlook in the aviation industry and operatingenvironment for MAHB remain challenging, bogged down by high operational costs from the KLIA2 and SGIA coupled with the negative travel sentiment due to unfortunate air tragedies.

It said on-year, MAHB registered RM31.4mil core net losses in 1Q15 vis-à-vis core net profit of RM133.3mil in 1Q14 despite a 12.0% increase in revenue to RM876.2mil. 

This is mainly driven by higher depreciation and financing costs arising from the opening of KLIA2 and full consolidation of SGIA that saw multi-fold increases by 2.1 times and 210.2 times, respectively. 

That said, its staff cost also saw an increase by 23.0% arising fromheadcount and salary increment/adjustments.

"Moving forward, we remain cautious on MAHB's outlook due to its high operating costs since the commencement of KLIA2, coupled with management’s conservative passenger traffic forecast of 85.8 million pax for 
the entire 2015 due to subsequent air travel mishaps in 2014.

"However, management remains hopeful that there could be more room for further optimism given government’s efforts in promoting Malaysia Year of Festivals campaign in 2015," it said.
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