RAB framework likely to be earnings neutral for MAHB, says RHB

  • Analyst Reports
  • Thursday, 24 Oct 2019

KUALA LUMPUR: Investors should take the opportunity to accumulate shares in MALAYSIA AIRPORTS HOLDINGS BHD given its current low valuation, says RHB research.

"The sell-down has lowered the valuation to 22.5x FY20F P/E, or -0.95SD, which means that most of the negatives have already been priced in," it said in a note.

The research house maintained maintained its FY19F-21F earnings forecasts on MAHB pending the final outcome of the RAB. It kept its buy rating on the stock with a target price of RM9.

According to RHB, the soon-to-be-announced regulated asset base (RAB) framework will likely be earnings neutral as the lower passenger service charge (PSC) in airports should be offset by lower user fees payable to the government.

The Malaysian Aviation Commission had announced that the RAB framework is in its final stage of completion and it was targeting implementing new rates at the start of 2020.

"We gather these details will be announced soon, ie the planned capex (2020-2022), new PSC, and landing and aircraft parking fees," said RHB.

To recap, MAVCOM had said the new RAB framework is expected to reduce the PSC for almost all commercial airports in Malaysia.

It estimated that the government will have to incur about RM300mil in subsidies if the PSC is not properly set or underinvestment in airports continue.

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