KUALA LUMPUR: Proposals from the Malaysian Aviation COmmission's second consulation paper on the Aeronautrical Charges Framework are overall positive for Malaysia Airports Holdings Bhd (MAHB), says RHB research.
"Although the proposed regulated WACC of 10.88% is lower than MAHB’s suggestion of 12.7-14%, it is at the higher end of MAVCOM’s initial range of 9-11% in the first consultation paper.
"Note that the WACC represents the fair return on capital for the amount of capex that MAHB will spend – as such, the higher value is better for MAHB," it said.
The research house also noted that MAVCOM has introduced a transfer passenger service charge.
Meanwhile, MAVCOM said RM5bil of capex can be admitted into the regulated asset base, which is close to MAHB"s capex plan of RM5.2bil under its business plans submitted on June 3 this year although it is below the RM10bil submitted in November 2018.
"We are positive on MAVCOM’s proposals as it has removed a large amount of uncertainty for the RAB framework. We expect MAHB’s valuation to rerate further," said RHB.
The research house maintained its buy rating on MAHB with a higher target price of RM9.20 from RM8.15 previously.
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