Analysts upbeat on MAHB earnings potential


  • Aviation
  • Friday, 29 Nov 2019

More passengers: RHB Research says MAHB’s earnings growth potential remains intact due to an increasing passenger volume.

PETALING JAYA: Analysts are positive on the earnings growth potential of MALAYSIA AIRPORTS HOLDINGS BHD (MAHB), given its rising passenger volume.

RHB Research, which maintained its “buy” call on the counter, raised its target price to RM9.25 in line with higher earnings estimates, resulting in better cash flow forecasts.

Although there is still some uncertainty on the regulated asset-backed (RAB) framework, which is expected to be implemented on Jan 1,2020, the research house believed the market has more than priced in a worst case scenario.

“In our view, a worst case is whether RAB’s decision gets delayed for another six to 12 months.

“In such circumstances, the current operating agreement should be extended with a similar condition, ” it said in a note.

As a result, it said MAHB’s earnings growth potential remained intact, due to an increasing passenger volume.

MAHB recorded a 17.44% higher net profit of RM197.87mil in the third quarter ended Sept 30 as its airports saw a pick-up in passenger traffic.

Higher passenger numbers contributed to 10.22% year-on-year (y-o-y) overall revenue growth of RM1.36bil.

Revenue from its airport operations alone was 10.7% higher at RM1.28bil, following improved contributions from both the aeronautical and non-aeronautical segments.

In terms of passenger traffic, MAHB recorded overall growth of 6.7% y-o-y.

MIDF Research which also kept its “buy” call on the counter, said the current momentum of passenger traffic, combined with the start of Visit Malaysia Year 2020 would continue to provide a strong base for incremental revenue generation.

“Moreover, the additional departure levy imposed on international departing passengers especially for economy class remains lower than regional peers such as Hong Kong, Thailand and Australia, ” it said.

The research house, which has a RM9.43 target price on the counter, also noted other growth factors such as direct connectivity from international airlines to locations such as Langkawi.

As such, it believed MAHB passenger numbers would be able to surpass the 100-million mark in 2019, while maintaining a relatively conservative growth rate of 3.5%.

CGS-CIMB Research, which has an “add” call on the counter, however, noted that AIRASIA is lobbying for MAHB’s airport operatorship monopoly to be broken up, and for new LCCTs to be built.

The research house said this was a workable alternative to the RAB model, given the low capex cost.

If this scenario materialised, MAHB may lose passengers to the new LCCTs, and may have to negotiate marginal cost support compensation from the government, it said.


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