Malaysia Airports to benefit from higher traffic

  • Business
  • Wednesday, 15 Jul 2015

PETALING JAYA: Malaysia Airports Holdings Bhd (MAHB) is expected to benefit from higher passenger traffic at Malaysian airports next year, according to Nomura Research.

In a report, Nomura Research said it was forecasting a 7% traffic growth in 2016, boosted by the tourism department’s marketing efforts like the continuation of the Visit Malaysia Year campaigns.

“For 2015, we expect only more than 1% international traffic growth in Malaysia due to capacity discipline at Malaysia Airlines and AirAsia and total traffic growth of 2% year-on-year (y-o-y).”

Meanwhile, both international and domestic traffic at Malaysian airports declined in June, with total traffic falling by 4% y-o-y mainly due to lower travel during the Ramadan period which started in mid-June.

“However, as per management, traffic from China is improving and is showing double-digit growth,” said the research unit, adding that it had noted that total traffic growth at Malaysian airports was flat in the first half of 2015.

“In our view, weakness in June traffic (due to Ramadan) will be felt in July as well, but we expect marginal growth in traffic (after) that.”

Meanwhile, traffic at MAHB’s Turkish unit, Istanbul Sabiha Gokcen International Airport (ISGIA), was also impacted by Ramadan. It registered international traffic growth of only 4% y-o-y in June, compared with more than 17% y-o-y in May.

“But it still registered a double-digit growth of 12% y-o-y in total traffic during the month and a 17% y-o-y growth in the first half of 2015. We see the slowdown in June as temporary and maintain our forecast of 19% y-o-y growth in total traffic for 2015 at ISGIA.”

Nomura Research remains neutral on MAHB’s stock, with a target price of RM6.80, as it believes the downside risks have been priced in. The stock has corrected about 33% since its peak in 2013.

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