KUALA LUMPUR: Maybank Investment Research believes it is still too early to tell what the final regulated asset base structure of Malaysia Airports Holdings Bhd
(MAHB) will look like.
The research firm said this in their Thursday report following discussions with the Malaysian Aviation Commission and MAHB.
It said MAHB's share price will be range-bound into 2019 when a clearer outlook on the framework reveals itself.
It also switched its valuation methodology to EV/Ebitda pegging MAHB to its historical mean of 10.5x on 2018.
It set a new target price of RM8.52 from RM8.11 previously and upgraded the counter to hold.
Maybank Investment Research said, based on previous experiences in London's Heathrow Airport and elsewhere in Europe, Brazil and India, the final outcome of incentive-based regulation has worked in favour of passengers as well as the airport stakeholders.
According to the research firm, the question is what the weighted average cost of capital the parties will agree to.
"Hard dialogues and negotiations are on-going and Raja Azmi (CFO) is leading the task for MAHB. The consensus is 7.3% based on Tenaga Nasional’s (TNB MK, HOLD) regulated rate.
"Comparing it against other airports under RAB framework suggests the WACC may be lower, at 6-7%."
It believes MAHB's share price will trade sideways pending the regulatory framework but will change for the better as it has near-guarantee returns with scope to outperform.
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