Stock Name: AIRPORT
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Research House: MIDF
Malaysia Airports Holdings Bhd
(Feb 17, RM6.03)
Upgrade to buy at RM6.20 with revised target price RM7.20 (from RM5.95): MAHB's FY10 revenue of RM1.81 billion was within ours and consensus' expectations, coming at 104.1% and 98.1% of full-year estimates respectively. FY10 revenue grew by 10.7% year-on-year (y-o-y) on the back of strong growth in airport operations, with retail revenues growing by 17.2% y-o-y.
MAHB's FY10 net profit was below expectations coming at 87% and 83.1% of ours and consensus estimations respectively. Net profit for FY10 declined by 22.2% to RM293.9 million due to the higher losses in an associate company, coming from the adoption of FRS139.
However, we are pleased that its FY10 operating profit remained solid with an increase of 10.7% y-o-y to RM544.2 million. This is due to the strong growth in passenger, cargo and aircraft movement registered in FY10. As we expected, MAHB registered its strongest quarter in 4QFY10 in terms of passenger, cargo and aircraft movement, growing by 6.5% y-o-y, 3.4% y-o-y and 3.8% y-o-y respectively. FY10's passenger, cargo and aircraft movement grew by 12.7% y-o-y, 14.2% y-o-y and 7.9% y-o-y respectively.
We are not worried by the marginal decline of 0.8% y-o-y of FY10's total revenue per passenger movements to register RM30.31. This was due to the 2.4% y-o-y decline in aeronautical revenue per passenger to RM15.02. However, the non-aeronautical revenue per passenger movement grew by 1.4% y-o-y to RM13.95. Non-aeronautical revenue in FY10 was RM806.5 million, a growth of 14.2% y-o-y, suggesting that MAHB is able to grow its retail business.
We revise our target price for MAHB to RM7.20 (from RM5.96) as we switch our valuation method from PER multiple to discounted cash flow method (discounted at a weighted average cost of capital of 8.5%) to better reflect the future potential of MAHB. We expect that MAHB will continue to be impacted by the losses in an associate company in FY11. However, we believe the impact will lessen, while MAHB's operations remain strong and stable, and we expect it to strengthen further after the completion of the new low-cost carrier terminal. As the expected total return of the revised target price is more than 15% to current share price, we are upgrading MAHB to 'buy'. ' MIDF Research, Feb 17
This article appeared in The Edge Financial Daily, February 18, 2011.
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Research House: MIDF
Malaysia Airports Holdings Bhd
(Feb 17, RM6.03)
Upgrade to buy at RM6.20 with revised target price RM7.20 (from RM5.95): MAHB's FY10 revenue of RM1.81 billion was within ours and consensus' expectations, coming at 104.1% and 98.1% of full-year estimates respectively. FY10 revenue grew by 10.7% year-on-year (y-o-y) on the back of strong growth in airport operations, with retail revenues growing by 17.2% y-o-y.
MAHB's FY10 net profit was below expectations coming at 87% and 83.1% of ours and consensus estimations respectively. Net profit for FY10 declined by 22.2% to RM293.9 million due to the higher losses in an associate company, coming from the adoption of FRS139.
However, we are pleased that its FY10 operating profit remained solid with an increase of 10.7% y-o-y to RM544.2 million. This is due to the strong growth in passenger, cargo and aircraft movement registered in FY10. As we expected, MAHB registered its strongest quarter in 4QFY10 in terms of passenger, cargo and aircraft movement, growing by 6.5% y-o-y, 3.4% y-o-y and 3.8% y-o-y respectively. FY10's passenger, cargo and aircraft movement grew by 12.7% y-o-y, 14.2% y-o-y and 7.9% y-o-y respectively.
We are not worried by the marginal decline of 0.8% y-o-y of FY10's total revenue per passenger movements to register RM30.31. This was due to the 2.4% y-o-y decline in aeronautical revenue per passenger to RM15.02. However, the non-aeronautical revenue per passenger movement grew by 1.4% y-o-y to RM13.95. Non-aeronautical revenue in FY10 was RM806.5 million, a growth of 14.2% y-o-y, suggesting that MAHB is able to grow its retail business.
We revise our target price for MAHB to RM7.20 (from RM5.96) as we switch our valuation method from PER multiple to discounted cash flow method (discounted at a weighted average cost of capital of 8.5%) to better reflect the future potential of MAHB. We expect that MAHB will continue to be impacted by the losses in an associate company in FY11. However, we believe the impact will lessen, while MAHB's operations remain strong and stable, and we expect it to strengthen further after the completion of the new low-cost carrier terminal. As the expected total return of the revised target price is more than 15% to current share price, we are upgrading MAHB to 'buy'. ' MIDF Research, Feb 17
This article appeared in The Edge Financial Daily, February 18, 2011.
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