PETALING JAYA: Malaysia Airports Holdings Bhd ’s (MAHB) share price dipped 4.7% to RM7.33, following an arbitration notice served by Segi Astana Sdn Bhd, claiming RM70mil against MAHB for the alleged losses and damages pertaining to the delay in commencement of operations of KLIA-2 Integrated Complex.
MIDF Research, in a recent report on MAHB, said the impact of the claims by Segi Astana, if successful, would be immaterial to MAHB’s financial position.
“Should MAHB not be successful in challenging the claims by Segi Astana, the impact would not be material to MAHB’s day-to-day operations as the group has generated a net operating cashflow of RM507mil, on average, for the past four quarters.
“Moreover, MAHB has a net gearing which is still manageable, remaining around 0.42 times after considering such payments to Segi Astana,” said MIDF Research.
According to a Bursa Malaysia filing, MAHB is disputing and challenging the claims by Segi Astana, having appointed a law firm in Malaysia to represent and assist the group in the arbitration proceedings.
MAHB has also issued an arbitration notice against WCT Bhd and Segi Astana to recover fixed monthly charges of RM958,849 for the supply of chilled water for the cooling system of KLIA-2 Integrated Complex.
Separately, MAHB via its wholly-owned subsidiary Malaysia Airport (Subang) Sdn Bhd, has entered into a joint venture (JV) agreement with BP Aerotech (Subang) Sdn Bhd to undertake the development of an aerospace and high-tech park within the Subang Aerotech Park.
The JV will be 70%-owned by BP Aerotech, with the remaining 30% to be held by Malaysia Airport (Subang).
Some 34.7 acres of land at the Subang Aerotech Park has been granted sublease rights for the JV company by MAHB, for the necessary aerospace-related developments.
Additionally, a capital expenditure of about RM40mil has been allocated for Subang Aerotech Park, which is expected to be fully completed in the next two years.
While there will not be any meaningful earnings accretion within this period, MAHB shall later gain non-aeronautical rental revenue through leasing activities with aerospace-related companies.
MIDF Research said the Subang Aerotech Park would enable MAHB to attract more aerospace-related activities in Malaysia in the long run, as 4,000 new aircraft are expected to be delivered to the Asean region by 2037.
In 2018, rental revenue contributed around 41% of MAHB’s non-aeronautical segment from Malaysian operations.
MIDF Research is upbeat on this news as it will positively impact MAHB’s long-term earnings.
“Looking ahead this year, MAHB will maintain its upward trajectory, especially in terms of passenger growth amid the relaxation of visa policies for Chinese and Indian nationals visiting Malaysia.
“Moreover, we expect MAHB’s efforts in not only attracting more new airlines but also offering increased connectivity to moderate the effects of the departure levy set to be imposed in June 2019 for outgoing international passengers.
“As such, we reiterate our optimism that MAHB passenger numbers will surpass the 100 million mark in 2019, while maintaining a relatively conservative growth rate of 3.5%,” said MIDF Research.