Friday, October 28, 2011

HDBSVR maintains buy on MAHB, ups TP to RM8.10

KUALA LUMPUR: Hwang DBS Vickers Research (HDBSVR) is maintaining a Buy on Malaysia Airports Holdings Bhd (MAHB) and raised the sum-of-parts based target price to RM8.10 from RM7.60 after an earnings upgrade.

It said on Friday, Oct 28 that at the current share price, this implies 38% upside.

'We continue to like MAHB for its long-term earnings potential from its cash-rich airport concession, land development, as well as overseas investments,' it said.

MAHB had received approval from the Ministry of Transport to raise the international passenger service charge (PSC) and aircraft landing and parking charges.

Effective Nov 15, International PSC for KLIA will increase from RM51 to RM65, while rates for LCCT KLIA and Terminal 2 Kota Kinabalu will increase from RM25 to RM32. And it will increase aircraft landing and parking charges by 9% and 18% per annum, respectively, on Jan 2012, Jan 2013 and Jan 2014. This is positive as we expect minimal incremental costs for MAHB.

'After imputing the resulting changes to airport rates and lower growth rates for passenger and aircraft movements, we nudged up FY11F-FY13F earnings by 1%-8%.

'Besides that, MAHB also signed an agreement with Tenaga Nasional (TNB) for the latter to supply cooling energy to KLIA2 for 20-years. Apart from securing operational requirement for KLIA2, MAHB will also receive royalties from the structured agreement,' it said.

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