Stock Name: AIRPORT
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Malaysia Airports Holdings Bhd
(Aug 17, RM6.50)
Maintain outperform at RM6.45 with revised fair value of RM8.10 (from RM7.82): MAHB has confirmed recent news reports it is increasing the passenger service charge (PSC). Starting Sept 15, MAHB will raise the PSC for international passengers at its low-cost carrier terminals (LCCT) and full-service carrier terminals. PSC in LCCTs ' LCCT-KLIA and Kota Kinabalu-Terminal 2 ' is expected to increase by RM7 to RM32, while full-service carrier terminals ' KLIA main terminal, Sultan Abdul Aziz Shah Airport, Langkawi, Penang, Kota Kinabalu-Terminal 1 and Kuching will be raised by RM14 to RM65.
MAHB will also increase aircraft landing and parking charges in three stages. Landing charges will be raised by 9% and parking charges by 18% for the next three years, in January 2012/13/14. However, MAHB will continue its incentive scheme which provides free landing for three years for all new routes and additional frequencies by airlines.
We believe the MAHB's PSC is still competitive compared with regional peers' international PSC ' Bangkok (RM71), Singapore (RM68) and Hong Kong (RM67). Similarly, the PSC for international charges in LCCT is lower than Singapore's LCCT PSC charge of RM36.
We are positive on these hikes given that they will boost MAHB's aeronautical revenue which has not been reviewed since 2002. We are raising our FY11 to FY13 net profit forecasts by 1.4%, 8.3% and 10.1% to reflect these changes.
Risks'' include: (i) regulatory risk, particularly, inability to raise airport charges; (ii) traffic risk on an economic downturn and outbreak of pandemic diseases; and (iii) operating risks in overseas ventures.
Our fair value is raised to RM8.10 (from RM7.82 previously) based on sum-of-parts valuation. The long-term prospects of the air travel sector in the region remain bright, backed by rising per capita income, rapid urbanisation and rising mobility. We continue to like MAHB, as: (i) it is an excellent proxy to the booming air travel sector in the region; (ii) it allows investors to piggy-back on LCC growth; and (iii) good execution for its overseas ventures. Maintain 'outperform'. ' RHB Research, Aug 17
This article appeared in The Edge Financial Daily, August 18, 2011.
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
| Research House: RHB | Price Call: BUY | Target Price: 8.10 |
Malaysia Airports Holdings Bhd
(Aug 17, RM6.50)
Maintain outperform at RM6.45 with revised fair value of RM8.10 (from RM7.82): MAHB has confirmed recent news reports it is increasing the passenger service charge (PSC). Starting Sept 15, MAHB will raise the PSC for international passengers at its low-cost carrier terminals (LCCT) and full-service carrier terminals. PSC in LCCTs ' LCCT-KLIA and Kota Kinabalu-Terminal 2 ' is expected to increase by RM7 to RM32, while full-service carrier terminals ' KLIA main terminal, Sultan Abdul Aziz Shah Airport, Langkawi, Penang, Kota Kinabalu-Terminal 1 and Kuching will be raised by RM14 to RM65.
MAHB will also increase aircraft landing and parking charges in three stages. Landing charges will be raised by 9% and parking charges by 18% for the next three years, in January 2012/13/14. However, MAHB will continue its incentive scheme which provides free landing for three years for all new routes and additional frequencies by airlines.
We believe the MAHB's PSC is still competitive compared with regional peers' international PSC ' Bangkok (RM71), Singapore (RM68) and Hong Kong (RM67). Similarly, the PSC for international charges in LCCT is lower than Singapore's LCCT PSC charge of RM36.
We are positive on these hikes given that they will boost MAHB's aeronautical revenue which has not been reviewed since 2002. We are raising our FY11 to FY13 net profit forecasts by 1.4%, 8.3% and 10.1% to reflect these changes.
Risks'' include: (i) regulatory risk, particularly, inability to raise airport charges; (ii) traffic risk on an economic downturn and outbreak of pandemic diseases; and (iii) operating risks in overseas ventures.
Our fair value is raised to RM8.10 (from RM7.82 previously) based on sum-of-parts valuation. The long-term prospects of the air travel sector in the region remain bright, backed by rising per capita income, rapid urbanisation and rising mobility. We continue to like MAHB, as: (i) it is an excellent proxy to the booming air travel sector in the region; (ii) it allows investors to piggy-back on LCC growth; and (iii) good execution for its overseas ventures. Maintain 'outperform'. ' RHB Research, Aug 17
This article appeared in The Edge Financial Daily, August 18, 2011.
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