Company Name: MALAYSIA AIRPORTS HOLDINGS BHD
|Research House: ALLIANCE||Price Call: HOLD||Target Price: 6.78|
Alliance Research expects Malaysia Airports Holdings Bhd's (MAHB) non-aeronautical revenue to be boosted upon the
completion of the Mitsui Outlet Park KL International Airport in 2015.
In a note today, the research house said once completed, MAHB would be entitled to an annual royalty and rent from the development, thus generating sustainable recurring income for the national airports operator.
MAHB signed a joint-venture agreement with Mitsui Fudosan Co Ltd to undertake the largest factory outlet project in South-East Asia, worth RM335 million.
Under the agreement, MAHB and Mitsui would form a joint-venture (JV) company, MFMA Development Sdn Bhd, to build the factory outlet. MAHB would hold a 30 per cent stake in the JV.
"We also favourably view the terms of the collaboration as MAHB will be entitled to an upfront concession fee, effectively subsidising its cost of investment in the JV.
"We are positive over the long-term fundamentals of MAHB, while riding the boom of low-cost carriers without the accompanying fuel cost risk," it added.
Alliance Research maintained it 'neutral' call on the stock, with an unchanged target price of RM6.78.-- Bernama