AllianceDBS keeps ‘buy’ on MAHB with RM9.75 target price

The regulatory asset base (RAB) framework may lead to further improvements in airport services and facilities, which in turn would drive passengers growth.

AllianceDBS Research aviation analyst Siti Ruzanna Mohd Faruk said the RAB framework has its benefits in allowing Malaysia Airports Holdings Bhd (MAHB) to claw back its investments and gain more ownership in operating the airports.

She said the RAB framework would provide a more transparent governance framework for airports, which is an important element for users and investors.

“The differentiated passenger service charges (PSCs) among airports, according to network, should lead to more reasonable charges for passengers, which differ in terms of level of services,” she said.

“We maintain a ‘buy’ call on MAHB with a target price of RM9.75 per share, based on our assumptions using the second consultation paper, under the network approach as its earnings could increase up to nine per cent,” she said.

Siti Ruzana said there would be a minimal impact on MAHB based on the negotiation of operating agreement (OA), citing that user fees are part of operating expenditure, which will be passed through as PSC charges.

“In case of higher OA, it will be reflected in the PSC calculation. As such, the selldown of MAHB shares following the comments on an alternative framework appears to be unwarranted,” she said.

She noted that the research house has yet to make any changes to its earnings pending release of the Malaysian Aviation Commission’s decision paper.

Meanwhile, AllianceDBS Research has maintained a ‘hold’ call on AirAsia Group Bhd with a target price of RM2 and fully valued for AirAsia X Bhd at RM0.12 per share.

“There could be upside to these players if PSC charges were to be lower for the second terminal at the Kuala Lumpur International Airport. However, we do not expect material changes to volume at this point,” she said.