Thursday 28 Mar 2024
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KUALA LUMPUR (Jan 11): Malaysia Airports Holdings Bhd (MAHB) fell among Bursa Malaysia's top decliners this morning after the airport operator missed its passenger volume target last year partly due to the shift of airlines seat capacity by some of the local carriers and lower-than-expected movement during the 14th general election period.

At 9.52am, MAHB shares were down 1.83% or 15 sen to RM8.05, with a market capitalisation of RM13.61 billion. The counter saw 237,600 shares traded.

For 2019, MAHB has set a lower passenger growth target of 4.9%, with international and domestic passenger traffic growing at 2.4% and 7.6% respectively, after taking into account the relatively low Brent crude price this year, gross domestic product growth of 4.9% and increasing US-China trade tension.

In a note today, TA Securities research said it remains conservative on MAHB's 2019 operational outlook by cutting the yearly growth in passenger movements to 3% (from 5% previously).

"This is taking into account of: AirAsia will increase its capacity by deploying six new aircraft for Malaysian operations, which would increase seat capacity by 9.1% based on our estimates; the termination of Resorts World Genting outdoor theme park, which used to serve as one important driver to attract foreign tourists in 2019; the increase in airfare due to higher fuel price, scheduled hike in airport tax hike in February 2019 and implementation of departure levy," the research firm said.

Given the change in earnings projections, TA Securities has downgraded MAHB's discounted cash flow (DCF) valuation to RM8.55 per share (from RM8.64 previously).

"We fine-tune our FY18-20 earnings lower by 0.6/1.9/2.0% after incorporating the total passenger movements in 2018 and our new growth assumptions for 2019 into our forecast.

"We maintain 'sell' call on MAHB until we have greater clarity on the new Regulatory Asset Base (RAB) and PSC (passenger service charge) structures," it added.

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