AmInvestment expects Turkey failed coup to impact MAHB

FILE PHOTO - A Turkish Airlines aircraft taxis at Ataturk International Airport in Istanbul, Turkey.

KUALA LUMPUR: AmInvestment Research expects the failed coup in Turkey to impact Malaysia Airports Holdings Bhd's (MAHB) wholly-owned airport operations there.

MAHB's operations in Turkey comprise its 100% interests in the Istanbul Gokcen International Airport (ISG) and LGM Havalimani (LGM), which manages and operate the airport. 

The research house said on Monday it was maintaining its Hold call for the airport owner and operator with an unchanged fair value of RM6.10 a share, based on a 25% discount to its sum-of-parts value of RM8.14 a share. 

AmInvestment said Wisma Putra has reported the situation in Turkey is normalising although the situation is still fluid after a failed military coup in the country. 

All airports in Turkey have also resumed its operations. Regardless, the continuing uncertainty in Turkey is a negative for MAHB's operations in Turkey, though the exact longer term impact is still unclear. 

Prior to this, MAHB had said the travel warnings to Turkey and visa requirements may restrict ISG's growth to over 10% as experienced previously. 

ISG passenger traffic grew 19.6% on-year to 6.7 million in 1Q16. ISG's traffic had already been affected by the bombing at neighbouring Ataturk Airport at the end of last month, visa restrictions as well as fewer travels during Ramadan. 

AmInvestment said in 1Q16, MAHB's Turkey operations incurred a loss after tax of RM69.3mil (-8.1% on-year) due to high finance costs and depreciation, while Malaysia operations posted a profit after tax of RM85.8mil (-10.7% on-year). 

The 1Q16 EBITDA of RM452.6mil, including ISG & LGM's at RM168.4mil, was in line with and represents 26% of the group’s RM1.7bil internal target, and also in line with its estimate at 27%. 

For FY15, the Turkey operations suffered a pre-tax loss of RM172mil mainly due to the amortisation of fair value of concession rights (20 years).

The group's passenger movements at its airports, including ISG, fell 4.2% to 9.05mil in June 2016, compared with 9.45mil a year earlier. 

Excluding ISG, passenger movements for June was 4.9% lower. The group recorded a 4.2% growth in 1H16. 

MAHB has maintained its passenger traffic growth for Malaysia airports at 2.5% for 2016. 

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