MAYBANK MAINTAINS ‘SELL’ ON MAHB
Airport operator’s high operational cost volatility a negative, uncharacteristic surprise, says research house
SOARING maintenance, staff and administration costs for the financial year ended December 31 last year hampered Malaysia Airports Holdings Bhd’s (MAHB) earnings and the company has failed to meet analysts’ expectations.
Maybank Investment Bank Research (Maybank IB) said the airport operator’s highly anticipated operational leverage also did not materialise.
The research house maintained a “sell” recommendation on the airport operator with a target price of RM8.11, compared with the last traded price of RM8.89 per share.
Maybank IB pointed out MAHB’s core net profit, after adjusting for all the non-cash items and payments for the perpetual sukuk, amounted to RM153.6 million, an increase of 219 per cent year-on-year.
Its unit revenue increased 3.4 per cent year-on-year to RM36.4 per pax, driven mainly by higher international passenger mix.
“There are still many unanswered questions on Malaysian Aviation Commission’s (Mavcom) drive to move the industry towards an incentive-based regulation (IBR).
“The management is optimistic that the IBR migration could be positive for MAHB as the framework ensures a fair rate of return.
“This alludes to the management’s belief that the current airport charges are too low and an escalation is forthcoming,” said Maybank IB in a recent note.
The research house also noted that Mavcom’s prime mission was to safeguard the consumers and ensure MAHB provided value for money services.
It said traffic growth at the Malaysian operations had been lacklustre since November last year with an average monthly growth of only one per cent yearon-year.
“This is well below our full-year growth assumption of seven per cent for this year.
“MAHB’s high operational cost volatility is a negative surprise and uncharacteristic,” said Maybank IB.