August’s passenger traffic growth in line with predictions

KUCHING: Malaysia Airports Holdings Bhd’s ( MAHB) passenger traffic growth for the first eight months of 2017 ( 8M17) was either within or above expectations, but analysts are expecting growth to taper during the September to December period.

As per a filing on Bursa Malaysia, the total MAHB network of airports, including Istanbul SGIA (ISG), registered 9.1 per cent growth for year to date (YTD) 2017 with 84.5 million passenger movements.

MAHB’s 8M17 passengers ( including ISG) growth of 9.1 per cent year on year (y-o-y) was in line with the research arm of Kenanga Investment Bank Bhd’s ( Kenanga Research) total MAHB growth forecast of 9.2 per cent.

On the other hand, with Malaysian airports recorded 63.5 million pax YTD, this came above the research arm of MIDF Amanah Investment Bank Bhd’s ( MIDF Research) 7.5 per cent y- o- y pax growth forecast for financial year 2017 ( FY17).

“We expect growth to taper in September-December due to the higher base in SeptemberDecember 2016,” it said.

MIDF Research liked MAHB as a proxy to Malaysia’s resilient inbound/ outbound travel industry, as the largest airport operator in Malaysia.

“MAHB received an extension of its operating agreement ( OA) which will last until 2069, providing clarity to investors on its longer term prospects as an airport concessionaire.

“Meanwhile, the company has imposed onto itself a oneyear timeframe for negotiations with the Government on the terms and conditions for its OA extension.”

Items of interest to the research arm included the rate of user fee MAHB pays to the Government and source of funding for capital expenditure, of which favourable negotiations could prompt upward revisions to forecasts.

As for Kenanga Research, the research arm made no changes to its FY17- 18E earnings forecasts as its underlying assumptions for FY17 passenger growth remained unchanged at 10 per cent for Malaysia and seven per cent for Turkey.

Post traffic review, Kenanga Resaerch downgraded MAHB to ‘ underperform’, from ‘ market perform’ previously, with an unchanged target price of RM8.38 per share.

This was due to MAHB’s share price having run up recently and the research arm currently did not see further catalysts for room to upgrade.

Meanwhile, MIDF Research maintained ‘ buy’ on the stock with a target price of RM9.98 per share.