Stock Name: AIRPORT
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Research House: OSK
KUALA LUMPUR: OSK Research is maintaining its Trading Buy recommendation on Malaysia Airports Holdings Bhd (MAHB) with a target price of RM5.50 based on 16x FY0 EPS. The research house said on Friday, April 2 it was generally pleased with the five-year business direction --"Runway To Success: Building A World-Class Airport Business 2010-2014". The plan is to focus on aeronautical revenue as the backbone supported by a conservative traffic growth of 4.1%. MAHB's aim is to nurture its retail business, expand its horizon to strategic land development and boost its overseas earnings five years from now. The key target is to achieve EBITDA of RM822 million on a base case scenario and RM1.12 billion on an optimistic case for FY14. "Being an airport operator, air traffic growth remains MAHB's underlying fundamental. The company has estimated a base growth rate of 4.1% CAGR from 2008 to 2014, which may offer some upside given the robust growth in the Low Cost Carrier (LCC) segment and other Asian markets," said OSK Research. Nevertheless, as its earnings projection incorporates a potential increase in passenger service charges (PSC) in 2014 as well as 30% increase in landing charges plus other aeronautical charges in May 2011, OSK Research said it may see some road blocks covered by the Marginal Cost Support (MARCS) agreed to by the Government under the Operating Agreement (OA). The research house said MAHB has big plans to raise for its non-aeronautical contribution to 67.1% by 2014, or by an absolute revenue of RM2.1 billion, from RM860.6 million. The company has a strong retail and commercial team that has successfully implemented its past Retail Optimization Plan (ROP). Going forward, the company has established clear plans to grow the retail business by introducing the right products at the right locations. MAHB has identified 2,730 acres of land surrounding the KLIA for land development. "While the management has guided for rental on the high side and has a bullish revenue projection of RM112 million by FY14, we are upbeat on its potential, given its previous success in developing Malaysia International Aerospace Centre (MIAC) at Subang Airport. "The company has also been slowly building its name in airport management overseas, having 3 such ventures under its belt. The management is also bidding for two airport management jobs in Asia, and hopes to secure these by year-end. However, these investments will bear fruit only after a five-year gestation period," it said.
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Research House: OSK
KUALA LUMPUR: OSK Research is maintaining its Trading Buy recommendation on Malaysia Airports Holdings Bhd (MAHB) with a target price of RM5.50 based on 16x FY0 EPS. The research house said on Friday, April 2 it was generally pleased with the five-year business direction --"Runway To Success: Building A World-Class Airport Business 2010-2014". The plan is to focus on aeronautical revenue as the backbone supported by a conservative traffic growth of 4.1%. MAHB's aim is to nurture its retail business, expand its horizon to strategic land development and boost its overseas earnings five years from now. The key target is to achieve EBITDA of RM822 million on a base case scenario and RM1.12 billion on an optimistic case for FY14. "Being an airport operator, air traffic growth remains MAHB's underlying fundamental. The company has estimated a base growth rate of 4.1% CAGR from 2008 to 2014, which may offer some upside given the robust growth in the Low Cost Carrier (LCC) segment and other Asian markets," said OSK Research. Nevertheless, as its earnings projection incorporates a potential increase in passenger service charges (PSC) in 2014 as well as 30% increase in landing charges plus other aeronautical charges in May 2011, OSK Research said it may see some road blocks covered by the Marginal Cost Support (MARCS) agreed to by the Government under the Operating Agreement (OA). The research house said MAHB has big plans to raise for its non-aeronautical contribution to 67.1% by 2014, or by an absolute revenue of RM2.1 billion, from RM860.6 million. The company has a strong retail and commercial team that has successfully implemented its past Retail Optimization Plan (ROP). Going forward, the company has established clear plans to grow the retail business by introducing the right products at the right locations. MAHB has identified 2,730 acres of land surrounding the KLIA for land development. "While the management has guided for rental on the high side and has a bullish revenue projection of RM112 million by FY14, we are upbeat on its potential, given its previous success in developing Malaysia International Aerospace Centre (MIAC) at Subang Airport. "The company has also been slowly building its name in airport management overseas, having 3 such ventures under its belt. The management is also bidding for two airport management jobs in Asia, and hopes to secure these by year-end. However, these investments will bear fruit only after a five-year gestation period," it said.
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