Strong performance in 1H sets good tone for MAHB’s robust second half
KUCHING: Malaysia Airports Holdings Bhd’s (MAHB) strong first half of financial year 2017 ( 1HFY17) passenger traff ic performance sets the tone for a robust latter half of the year.
Analysts at MIDF Amanah Investment Bank Bhd ( MIDF Research) saw that Malaysia’s total pax traffic grew 11 per cent year on year (y-o-y) in 1HFY17, totalling 46.9 million.
Growth was driven by international traffic, it said, which expanded 14.5 per cent y-oy and outpacing domestic traffic growth of 8.1 per cent on an annual comparison.
“The strong performance in the first half, in our view, sets the tone for a robust second half,” detailled MIDF Research in the report.
Hence, the research arm revised its passenger growth forecast for Malaysian airports for FY17 and FY18 from 6.5 per cent and three per cent to 8.2 per cent and four per cent, respectively.
This optimism stemmed from the airport operator’s aggressive capacity expansion by local and foreign carriers, higher average load factors supported by an increasein travel demand and an anticipated pickup in inbound tourist arrivals in 2HFY17.
Against the backdrop of improving passenger traffic, MIDF Research lifted its earnings forecasts to incorporate higher passenger service charges (PSC) revenue collection and retail sales.
MIDF Research also upgraded to ‘buy’ with a target price of RM9.98 per share, based on its discounted cash flow (DCF) model assuming weighted average cost of capital (WACC) of 7.8 per cent and Beta of 1.1.
Overall, MIDF Research liked MAHB as a proxy to Malaysia’s resilient travel demand and improving tourism industry, as the largest airport operator in Malaysia.
“In addition, MAHB received an extension for its operating agreement ( OA) with the government which will last until 2069,” the research arm said.
“This allays any concerns on the right to operate its concession assetswhilespreadingdepreciation and amortisation charges over a longer period.”
This aside, MIDF Research is starting to see higher interest from third parties in relation to the KLIA Aeropolis project, with Alibaba’s logistics arm, Cainiao signing a memorandum of understanding (MOU) to set up its regional distribution hub.