Maybank Research maintains sell on Malaysia Airports

Pic taken from MAHB Facebook

KUALA LUMPUR: Maybank Investment Bank Research is maintaining its Sell call on Malaysia Airports Holdings Bhd (MAHB) with a target price of RM8.11 compared with the last traded price of RM8.89.

It said on Thursday MAHB’s FY17 results disappointed on soaring cost items namely maintenance, staff and administration. 

Cashflow also failed to meet with expectation and the highly anticipated operational leverage didn’t materialise. 

“There are still many unanswered questions on Malaysian Aviation Commission's (MAVCOM) drive to move the industry towards an incentive-based regulation (IBR). We keep our FY1819 earnings forecasts and DCF-TP of RM8.11 pending a company visit,” it said.      

Maybank Research pointed out MAHB’s FY17 core net profit, after adjusting for all the non-cash items and payments for the perpetual sukuk, amounted to RM153.6mil (+219% on-year). 

Unit revenue increased by 3.4% on-year to RM36.4/pax driven mainly by higher international passenger mix.       

“Management is optimistic that the IBR migration could be positive for MAHB as the framework ensures a fair rate of return. 

“This alludes to management’s belief that the current airport charges are too low and an escalation is forthcoming. 

“We, on the other hand, take the view that MAVCOM’s prime mission is to safeguard the consumers and ensure MAHB provides value for money services,” it said.  

Maybank Research noted that traffic growth at the Malaysian operations has been lacklustre since November 2017 with an average monthly growth of only 1% on-year. 

“This is well below our 2018 full-year growth assumption of 7%. Furthermore, MAHB’s high operational cost volatility is a negative surprise and uncharacteristic,” it said.