28 October, 2011
Despite the slight setback from the recent freeze on the hike in aeronautical charges, Malaysia Airports Holdings Bhd (MAHB) will still stand to gain from the Kuala Lumpur International Airport Phase 2 (klia2) from 2013 onwards.
The klia2 construction was progressing at 45 per cent as at Sept 2011, with its completion scheduled by the fourth quarter of 2012. The research arm of Kenanga Investment Bank Bhd (Kenanga Research) in its research report noted that the klia2 joint venture with WCT Bhd would bring in an earnings accretions of 29 sen per share to MAHB which was already factored into its forecast.
To recap, the government’s recent move to freeze MAHB’s proposed tariff hikes on aircraft landing and parking, due for an increase effective 2012, could potentially see MAHB reducing the payment of user fees to the government.
On the other hand, OSK Research Sdn Bhd (OSK Research) opined that MAHB might experience an impact from the possibility of klia2 not being completed on time for commencement in 2012.
“Should the terminal be completed only in early 2013, the impact on our financial year 2012 (FY12) forecasts would be small as this may give rise to only a small 3.5 per cent reduction in earnings,” OSK Research highlighted.
Valuation-wise, a delay would carry little weight in lowering OSK Research’s fair value for MAHB over the longer term.
Kenanga Research maintained its target price at RM6.83 based on sum-of-parts valuation. Meanwhile, OSK Research made no changes to their earnings estimates, with a discounted cash flow derived target price of RM7.36, based on nine per cent weighted average cost of capital.