KUALA LUMPUR, Dec 13 — RHB Research expects Malaysia Airport Holdings Bhd (MAHB) to record a strong earnings growth of 13 per cent in the financial year 2020 (FY2020), supported by an estimated five per cent expansion in passenger volume.
Turnaround at Istanbul Sabiha Gokcen International Airport is also set to be a catalyst for the earnings growth, it said in a note today.
The research house said it is maintaining its ‘buy’ call for MAHB with a target price at RM9.25.
At 10.40am today, its shares dropped 10 sen to RM7.79 with 408,900 shares traded.
“Risks to our recommendation and target price include weaker-than-expected passenger traffic, cancellation of the Regulatory Asset Base (RAB) framework with new models that are earnings dilutive, a negative outcome from ongoing court cases, and a sharp depreciation of the TRY (Turkish lira),” it said.
Looking at the current MAHB price, RHB Research said that most of the uncertaintiesy surrounding the RAB or other frameworks have been priced in.
“Malaysia Aviation Commission (Mavcom) will be dissolved and its functions placed under the Civil Aviation Authority of Malaysia (CAAM).
“Although this means there should be significantly higher uncertainty on the Regulatory Asset Base (RAB), we believe that current valuation at -1.16SD has more than priced in this potentially negative news,” it said.
Given the RAB was set up by Mavcom, RHB believes the framework’s feasibility will be reviewed by looking into other models as well.
“In the near term, we believe the current Operating Agreement will likely be used for the next six to 12 months, pending a new model for the aviation industry,” added RHB Research. — Bernama
