Recent sell-down presents buying opportunity in MAHB

  • Analyst Reports
  • Friday, 10 Jul 2020

KUALA LUMPUR: The recent sell-down in Malaysia Airports Holdings Bhd's (MAHB) shares has presented an opportunity to buy into the stock amid optimism in the yet-to-be-signed operating agreement (OA).

Kenanga Investment Bank research, which has an "outpeform" recommendation on MAHB with a target price of RM6.30, said the new OA with the government following the extension of the concession will pave the way for the stock to be re-rated.

"We believe the new OA will be investor-friendly, and create a sustainable long-term development of MAHB" it said.

The research house added that while it expects Covid-19 to impact passenger traffic growth in Malaysia and Turkey, the experience from the SARS outbreak suggests that passenger volume will see a rapid recovery once the pandemic subsides.

In 1QFY20, MAHB's earnings came in below expectations due to lower-than-expected contribution from retail and higher-than-expected losses in Turkey. Revenue in the quarter fell 25% in tandem with the contraction in passenger movements due to the pandemic.

Kenanga, which has a "neutral" rating on the aviation sector, cautioned that the sector could be further de-rated by fears of a longer-than-expected recovery and remain mired in losses.
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