KUALA LUMPUR: Kenanga Research maintained market perform on Malaysia Airports Holdings Bhd
with an unchanged target price of RM8.60 as its 5M18 passenger growth of 4.3% on year was deemed in line with forecast.
The research house said the growth was in line with its total growth forecast of 8.5% as it expects growth to come in stronger in the months ahead due to May's traffic being slightly subdued due to seasonality.
For the month, KLIA Main registered negative growth of 2.8% on year with international and domestic traffic contracting 0.7% and 6.5% respectively due to the fasting period and reduction in capacity in local airlines.
However, KLIA2' traffic growth continued at 2.3% on year due to growth from AirAsia as it increased its capacities through higher plane utilisation as well as the number of planes.
Meanwhile, Turkey's ISG Airport registered a mild 1.4% growth in traffic due to the Ramadan month.
Kenanga Research said the anticipated Quality of Service framework to be implemented by MAVCOM from 3Q18 for airports could pose as downside risks.
"MAVCOM has proposed a financial penalty of up to 5% of aeronautical revenue, which could dent our FY18E CNP by 7% for every 1% penalty," it said.
"That said, in order to mitigate penalties, AIRPORT has increased their planned CAPEX to RM600-700m (from typically RM300m) in FY18-19 to upgrade their infrastructure, i.e. trains,
baggage systems and toilets."
Limited time offer:
Just RM5 per month.
