Stock Name: AIRPORT
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Research House: HWANGDBS
Malaysia Airports Holdings Bhd
(April 13, RM6.15)
Maintain buy at RM6.16 with target price RM7.60: We understand that Middle East passenger volume has risen 6% year-on-year (y-o-y) at KLIA in January and February. This signals that travel to Malaysia has not been affected by the political turmoil in the Middle East.
In fact, we believe passengers could have switched their holiday and/or business destination to Malaysia due to the unrest. Passenger traffic from Middle East accounted for 8% of total passengers at KLIA. Last month's earthquake and tsunami in Japan has had minimal impact as passengers from Japan only contribute to 2% of KLIA passenger numbers.
We cut FY11F earnings by 6%, mainly after downgrading passenger growth assumptions and raising incentives. But higher rental income mitigated the impact. We gather that 1Q11 passenger traffic was strong with double-digit y-o-y growth, but passenger volume on full-service carriers might have dropped due to high oil prices.
However, MAHB should be able to capture the shift in passenger traffic to low-cost flights. Passenger volume at Malaysian airports should remain resilient, as in 2008/09 when MAHB still registered strong 7% to 8% passenger growth despite a weak air travel market due to the global economic downturn.
MAHB highlighted in its FY10 annual report that the total area for development within the KLIA Aeropolis would be expanded to 6,750 acres (2,731.6ha). This is 2.5 times larger than the existing 2,730 acres that we value at 90 sen per share. ' HwangDBS Vickers Research, April 13
This article appeared in The Edge Financial Daily, April 14, 2011.
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Research House: HWANGDBS
Malaysia Airports Holdings Bhd
(April 13, RM6.15)
Maintain buy at RM6.16 with target price RM7.60: We understand that Middle East passenger volume has risen 6% year-on-year (y-o-y) at KLIA in January and February. This signals that travel to Malaysia has not been affected by the political turmoil in the Middle East.
In fact, we believe passengers could have switched their holiday and/or business destination to Malaysia due to the unrest. Passenger traffic from Middle East accounted for 8% of total passengers at KLIA. Last month's earthquake and tsunami in Japan has had minimal impact as passengers from Japan only contribute to 2% of KLIA passenger numbers.
We cut FY11F earnings by 6%, mainly after downgrading passenger growth assumptions and raising incentives. But higher rental income mitigated the impact. We gather that 1Q11 passenger traffic was strong with double-digit y-o-y growth, but passenger volume on full-service carriers might have dropped due to high oil prices.
However, MAHB should be able to capture the shift in passenger traffic to low-cost flights. Passenger volume at Malaysian airports should remain resilient, as in 2008/09 when MAHB still registered strong 7% to 8% passenger growth despite a weak air travel market due to the global economic downturn.
MAHB highlighted in its FY10 annual report that the total area for development within the KLIA Aeropolis would be expanded to 6,750 acres (2,731.6ha). This is 2.5 times larger than the existing 2,730 acres that we value at 90 sen per share. ' HwangDBS Vickers Research, April 13
This article appeared in The Edge Financial Daily, April 14, 2011.
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