Monday, September 12, 2011

OSK Research lowers MAHB valuation to RM7.36

KUALA LUMPUR: OSK Research has reduced its valuation for Malaysia Airports Holdings Bhd (MAHB) to RM7.36 from RM8.10 but it is maintaining its BUY call.

It said on Monday, Sept 12 it continues to view MAHB as a defensive aviation play which will do well in both good and bad times, thanks to resilient air travel demand and its large base of low cost carrier passengers.

On the move to lower the valuation, it said this was based on the government's move to put on hold the recently approved increases in airport charges for an indefinite period. MAHB announced the decision to put off the hike last Friday.

OSK Research said the decision did not come as a surprise given the intense lobbying from AirAsia and MAS following the sealing of their collaboration agreement early last month. 'While the freeze on raising tariff is negative to MAHB, the turn of events demonstrates the Government's (Khazanah) commitment to the recently signed collaboration between AirAsia and MAS,' it said.

MAHB had earlier announced that travellers going overseas via Kuala Lumpur International Airport (KLIA) would have to pay RM65 (up from the current RM51) while the charge for those departing from the Low-Cost Carrier Terminal (LCCT) would be RM32 (up from RM25). The aircraft landing and parking charges were to be gradually raised by 30% and 64% respectively. MAHB, which has lobbied for a long time for a review of airport taxes, submitted the application for the upward revision on charges two years ago.

Under the Operating Agreement signed in 2009, the hike in passenger service charge'' will be determined via an inflation pass-through formula (compounded) every five years.

'As long as the actual PSC is below the benchmark rate (as is the current situation now), MAHB will receive restitution from the Government. Currently MAHB receives a RM14 subsidy for each international non LCCT passenger since the RM51 being charged is below the RM65 benchmark,' it said.

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