KUALA LUMPUR: Kenanga Research has downgraded its FY20 net profit forecast on Malaysia Airports Holdings Bhd (MAHB) as it cut its passengers growth while expecting a loss for its Turkey operations.
“All in, we cut our passenger growth assumption in FY20E from 7% to 4% and forecast a loss of RM40mil in Istanbul Sabiha Gokchen (ISG) compared to a profit of RM40mil in FY20, ” it said.
The research house, which has an outperform recommendation on the stock, slashed its target price to RM7.20 from RM9.90 previously.
Kenanga expects MAHB to be impacted by the Covid-19 in terms of passenger traffic growth and potential tariff rebates or discounts on its retail rentals.
“Management highlight that MAHB is still talking to the Government in terms of mechanism on the recently announced rebates on rental for premises at the airport as well as landing and parking charges, ” the research house.
In FY19, the airport operator’s core net profit was RM537.5mil, which was 26% higher year-on-year but below expectations at 85% and 90% of Kenanga’s and consensus estimates.
However, Kenanga continues to like the stock as an attractive proxy play for air travel due to rising per capita income and its monopolistic position.
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