28 January 2014
RHB Research has upgraded MAHB to Buy following the 11% stock retracement when it downgraded the company to Neutral.
“However, the earnings cut reduces our fair value to RM9.80 based on 7.1% WACC,” it said on Tuesday.
RHB said MAHB’s earnings missed estimates on higher-than-expected staff costs due to the additional staff intake for klia2.
“Despite the lower earnings forecasts, we remain optimistic on the klia2 growth story.
“The outlook is also looking positive for its Turkey associate, with earlier-than-anticipated bottomline breakeven targeted by FY15,” it said.
It said notable one-off expenses included losses amounting to RM48.8mil as a result of the non-equity cash injection into its Turkey associate, Sabiha Gokcen, which had to be written down.
MAHB noted that any hike in airport tax will be announced by the Government by 12 Feb.
“A scheduled increase in passenger service charges (PSC) is due this year and, should the Government decide not to absorb the hike, it will be passed on to passengers instead.
“In 2014, management is targeting a 9.7% growth in passengers and an EBITDA target of RM860mil.
On klia2’s completion, MAHB said it is still on track for a May opening with unchanged costs of RM4bil. Its associate, Sabiha Gokcen, is expected to break even by FY15 on the back of higher volume resulting in economies of scale.
“While we have maintained our key revenue assumptions, we have raised our estimates for staff costs by 5% per year for FY14-FY15.
“Note that we are still conservative on the passenger growth assumptions. We have also inputted an additional RM100mil to FY14 capex and a higher depreciation rate assumption.
“As such, our FY14 and FY15 earnings are lowered by 19% and 13% respectively,” it said.
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