Steady performance for Malaysia Airports
KUALA LUMPUR: It was a slow but steady half for Malaysia Airport Holdings Bhd'(MAHB) as results for its first half of financial year 2018 (1HFY18) which were deemed to be within expectations with core net profit coming in at RM215.6 million, meeting 49 per cent of consensus full-year estimates.
In a results note, Kenanga Investment Bank Bhd's research team (Kenanga Research) said that the 1HFY18 CNP has improved by 120 per cent year over year (y-o-y) as it was backed with a revenue growth of 8 per cent and +4 points improvements in operating margins.
MIDF Amanah Investment Bank Bhd's research arm MIDF Research elaborated that the increase in revenue was in-line with the 5.3 per cent y-o-y weighted-average growth of passenger traffic in both Malaysia and Turkey during the period under review.
“Overall international traffic grew 8.3 per cent y-o-y, showing robust demand of this particular segment. This was buoyed by continuous increase in traffic flow, attributable to supportive visa policy and healthy tourism landscape.
“On the domestic front, Aidulfitri holidays, which coincided with the two weeks mid-term school break, was the driver in 2QFY18.
“The improvement of passengers' traffic had positive impact to the passenger service charge (PSC) and rental revenue which together constitutes 59.0 per cent of 1HFY18 total revenue,” said the research arm in a results review.
The PSC rate for international traffic is considerably higher than domestic traffic and drove up +15.6 per cent y-o-y for the group while improvement in retail revenue lead to positive rental reversion rates, leading to +8.1 per cent y-o-y increase in rental revenue.
However, quarter-onquarter (q-o-q), the CNP was a drop by 50 per cent due to weaker revenue from lower international traffic coupled with adjustment in MATCS PSC, lower contribution from tis retail and commercial revenue and compression in operating margins of 4 points due to a 40 per cent spike in tax.
A 5.0 sen dividend was also declared but this was deemed to be short of Kenanga research's full-year expectations of 14.0 sen.
Going forward, it looks like MAHB's operation efficiencies will continue on improving as MIDF Research reports that its overall expenses are inching down with continual reductions in direct labour and overheads.
That being said, Kenanga research believes that there is still room for improvement for MAHB in regards to meeting MAVCOM's quality of service framework which is expected to roll out in stages.
Additionally, during an analyst briefing, the research arm also reported that MAHB's management has said that the development of the stake sale of ISG would be to continue looking out for a strate3gic partner that would add value to their Turkish business such as the extension of concession or enhancement of traffic growth with no commitment on timeline of the potential divestment.
“Given the strong earnings results in 1HFY18, we opine that the current momentum of passengers' traffic will continue to provide a strong base for incremental revenue generation moving forward.
“This will be supported by accommodative visa policies in Malaysia, leaving positive impact to better inbound passengers' traffic,” said the research arm.