MAHB on track to meet five-year plan


PETALING JAYA: Malaysia Airports Holding Bhd (MAHB), which recently unveiled its key performance indicators (KPIs) for this year, is expected to achieve its five-year (2010-2014) business plan.

Among its strategies to increase its earnings before interest, taxes, depreciation and amortisation (EBITDA), MAHB plans to manage more airports overseas, boost commercial revenue, increase passenger traffic at the KL International Airport (KLIA) and co-develop land.

The airports operator announced last April that under its five-year plan, it aimed to hit EBITDA of RM1bil and return on equity of 10% in 2014.

In terms of passenger volume, it aims to achieve 60 million passengers by 2014, with focus on strengthening KLIA as the next-generation hub.

According to most analysts, MAHB's five-year plan was conservative and achievable.

MAHB handled 51 million passengers in 2009, which contributed to growth of 8.2% compared with 2008, for both passengers and cargo.

For this year, MAHB, which operates and manages almost all airports in Malaysia, has set KPIs to achieve EBITDA of RM773.4mil, return on equity of 10.73% and a top-five worldwide ranking for KLIA.

But MAHB remains concerned over the economic weakness especially in Europe and to a certain extent in the United States, as their governments are increasingly adopting austerity measures to rein in deficit spending and debt. Oil prices are also seeing an uptrend.

However, the International Air Transport Association (IATA) said that airlines' profitability had picked up and was expected to improve further. This is likely to encourage more capacity, cheaper fares and more travel.

Airports Council International has estimated this year's global passenger growth at 4.9%.

In general, MAHB expects a challenging year ahead with major ongoing development works in the construction of KLIA2 and Penang International Airport.

Established in 1991, MAHB had survived the turbulences which significantly affected airlines and airport operators. These include the Asian and global economic crises in 1997 and 2008 respectively, the Sept 11 attacks and the severe acute respiratory syndrome (SARS) in 2003.

Going forward, MAHB is expected to gain from the positive forecasts for the tourism sector and its overseas ventures.

“We expect tourist arrivals in the last quarter of 2010 to be seasonally the strongest, given the festive and holiday seasons. As of last September, the number of tourist arrivals grew by 4.8% year-on-year to 18.2 million,” said Affin Investment Bank in a recent report.

In terms of overseas ventures, MAHB is the operator of the busiest airport in Turkey the Istanbul Sabiha Gokcen International Airport which is set to benefit from spillover traffic from the Atarturk International Airport, a major airport in Turkey and one of the fastest growing airports in Europe.

Another focus this year would be its recent joint venture to expand, operate and maintain the Male International Airport, Maldives, with the construction cost estimated at about US$373mil. MAHB is expected to work on US$86mil of the total project cost.

MAHB also operates India's largest airport, located in New Delhi, and another airport in Hyderabad.

For 2010, the company expects to post a double-digit growth for both passenger and cargo volume.

For the first nine months of its financial year ended Dec 31, 2010, the company recorded a 15% rise in passenger traffic, year-on-year.

However, during the same period, MAHB posted an 18.2% lower net profit of RM193.8mil compared with the previous year.

This was despite achieving a higher revenue of RM1.3bil during the period compared with RM1.2bil a year earlier.

But, according to a report by Kenanga Research, MAHB's core net profit of RM275mil for the first nine months of the financial year ended Dec 31, 2010 reflected a growth of 16%. (Core net profit is operational profits from core activities and not from other sources such as equity investment or one-off sale of asset. It means that MAHB still recorded growth operationally although net profit for the period slid.)

EBITDA for the period under review stood at RM498.9mil. Analysts expect the last quarter of 2010 to be more robust via growth in passenger volume as this was a seasonally peak period due to year-end and school holidays.

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