16 June 2017
HLIB Research has a ‘buy’ call on Malaysia Airports Holdings Bhd (MAHB), with a target price of RM9.80, on news of robust passenger traffic growth as well as optimism over MAHB's KLIA Aeropolis masterplan.
The research house said that MAHB is a major beneficiary of growth in air travel demand in Malaysia.
"Year-to-date (for May), MAHB has achieved strong passenger traffic growth of 11.8 per cent year-on-year for its Malaysia operations.
"We expect the positive trend to continue in 2017, driven by growing tourist arrivals and resilient air travel demand by locals as well as capacity expansion by major Malaysia-based airlines," HLIB Research said.
The Hong Leong Investment Bank's unit wrote in its company insight report on MAHB that the growth in arrivals is largely driven by non-Asean international traffic and this is positive for MAHB because of the higher tariff rates of RM50-73/per person (pax) and higher average retail spending/pax.
The airport operator is expected to remain focused on developing KLIA Aeropolis (through lease income, share of profit and concession fee deals) to boost its non-aeronautical revenue, by leveraging on the expected strong passenger traffic growth.
"Both initial investment in the Mitsui Outlet Park and the klia2 Gateway since 2010 have started to bear fruit with positive contribution in 2016," it wrote, while also highlighting that recent developments include land leased out to logistics and MRO players.
On the downside, HLIB Research pointed out that risks to the company could come from world crises brought on by war, or epidemic outbreaks, as well as added competition from the development of a high speed train link between Singapore and Penang.
Original Source: nst