MAYBANK IB POSITIVE ON MAHB
Airport operator likely to sustain double-digit traffic growth, given that industry close to maturity
MALAYSIA Airports Holdings Bhd’s (MAHB) positive earnings and cash flow outlook, driven by operating leverage, has all the positives with valuations hovering at a 10-year peak.
Maybank Investment Bank Bhd (Maybank IB) in its recent note said MAHB risk reward had been fairly balanced based on its fundamentals.
Maybank IB has maintained its “hold” call on valuation with a target price of RM8.48.
MAHB’s 2017 third-quarter results on total passenger traffic grew by 6.6 per cent year-on-year and the higher yielding international passenger mix increased by 2.7 percentage points to 47.2 per cent year-on-year.
“We estimate a third-quarter core net profit of about RM72 million an increase of 28 per cent quarter-on-quarter.
“We now include perpetual sukuk as part of core net income and this cut RM57 million from our financial years 2017 to 2019 forecasts,” it said.
Moving forward, Maybank IB said MAHB was likely to sustain a double-digit traffic growth given that the industry was close to maturity.
“Therefore, management needs to boost unit revenues and focus on cost efficiency to drive future earnings,” it said.
Maybank IB said the unit revenue trend was positive on the back of strong growth in international traffic, which was higher passenger service charge and ability to buy duty-free goods.
Cost efficiency has shown some notable improvements in the past two quarters.
The research house noted that the Malaysian operations recorded a growth of six per cent yearon-year in the third quarter while the nine-month traffic growth was at 10.2 per cent year-on-year.
Meanwhile, the Malaysian operations had a 51.7 per cent international passenger split in the third quarter of this year, a 3.2 percentage point growth yearon-year.
Istanbul Sabiha Gokcen International Airport’s (SGIA) international passenger composition also grew by 1.1 percentage points to 34.7 per cent year-on-year.
Maybank IB said collectively, MAHB recorded a 47.2 per cent international passenger split, which is a 2.7 percentage point growth year-on-year.