KENANGA UPBEAT ON MAHB’S TURKEY OPS
Malaysian and Turkey operations expected to record higher passenger volume in Q4
MALAYSIA Airports Holdings Bhd’s (MAHB) Turkey operations are expected to show positive growth, while passenger growth for Turkey and Malaysian operations are likely to increase seven and 10 per cent, respectively, this year.
Kenanga Research expects Turkey passenger volume to improve by seven per cent from the current four per cent on a positive development in the country’s tourism, supported by the constitutional referendum held throughout on April 16.
The research house said the potential re-rating catalysts for the airport operator are due to stronger-than-expected recovery in its Turkey operations and higher-than-expected passenger growth in the Malaysian operations.
“The (April 16) referendum adopts a presidential system of government that will make Turkish democracy more resilient by putting an end to the existing weak coalition of governments, which could possibly deter future military interventions,” it said.
Kenanga said ISG operation improved last month in terms of passenger growth, which registered a 6.6 per cent rise year-onyear — increases of 10.3 and 4.9 per cent in international and domestic passengers, respectively.
“We deem broadly in line with expectation of a stronger fourth quarter for MAHB due to seasonality factors.”
Kenanga said in the first nine months of this year, MAHB registered a core net profit of RM166 million, accounting for 68 per cent of its estimation.
“We make no changes to our FY 2017 and 2018 earnings forecasts and maintain our target price of RM8.38, given the better earnings prospects from the new passenger service charge structure and the operating agreement extension.”
CIMB Research said it was also raising MAHB’s core earnings per share forecast for FY 2017 to 2019 by 12 to 21 per cent, with a target price of RM10.56 by the end of next year.
This was attributed to both Malaysia and Turkey’s good financial results and promising recovery at ISG, revising up ISG passenger traffic growth and potential for additional valuation there.
CIMB Research expects Malaysian passenger traffic growth to be focused on highervalue international traffic.
AirAsia X would take delivery of three A330 leases in the second half of next year, while Malaysia Airlines would receive six A330 leases from February to September next year.
CIMB said MAHB’s catalyst could arrive by the second half of next year, citing the airport operator ’s negotiations with the government on the terms of the concession to be completed.