Kenanga maintains 'Market Perform' on MAHB, TP at RM8.70

  • Analyst Reports
  • Friday, 11 Oct 2019

KUALA LUMPUR: Kenanga research maintained its market perform rating on Malaysia Airlines Holdings Bhd as its 9MFY19 passenger growth of 4.8% came within its forecasts.

This was achieved on the back of a 7% quarter-on-quarter growth to 37 million in passenger movement in 3QFY19, which was a quarterly record for the airport operator.

"Pending the final quarterly results sometime in Nov, we keep our earnings forecast unchanged.

"Our TP is RM8.70 based on 22x FY20E EPS (at +1.0SD above 5-year historical forward mean) which is at a 20% discount to regional peers’ average to reflect MAHB’s relatively smaller market capitalization," it said.

The research house noted that MAHB's stock has risen 32% over a 52-week period and is currently trading at rich valuations of 25x on FY19E earnings and 22x on FY20E earnings.

It added that there could be a potential ratings earning or rating upgrade catalyst upon the release of the final consultation paper on the implementation of RAB in mid-October.

To recap, the growth in 3QFY19 was largely driven by KLIA main with growth in both international and domestic segments. KLCI2 recorded flat growth for both Asean and non-Asean segments.

"We believe the passenger traffic movements were driven by continuous tickets

promotions and fleet expansion by airlines.

"Specifically, 3QFY19 saw 18 airlines registering double-digit growth. A total of 17 airlines including 4 new ones that were not operating in September 2018, registered

double-digit growth for September 2019 for international passenger movements," said Kenanga.

In Istanbul, the Sabiha Gokcen International Airport (ISG) experienced high-traffic growth with double-digit growth driven by the international sector since January this year.

However, Kenanga expects the strong growth to taper off in 4QFY19 following the end of the summer months and holidays.

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