Wednesday, November 30, 2011

RHB Research maintains Outperform on MAHB, FV RM8.39

KUALA LUMPUR (Nov 30): RHB Research Institute is maintaining its outperform recommendation on Malaysia Airports and raised its fair value estimate to RM8.39 from RM8.08 based on 'sum-of-parts'.

It said on Wednesday that MAHB forecasts the CONSTRUCTION [] cost of KLIA2 to escalate to between RM3.6 billion and RM3.9 billion mainly due to upgrades of specifications of the airport. The initial budget was RM2.5 billion).

RHB Research said despite the additional upgrades, MAHB reiterate that KLIA is on track to be completed by Jan 2013 and fully operational by April 2013.

According to MAHB, the additional cost of up to RM1.4 billion for KLIA2 would funded with the remaining RM600 million not yet drawn down from its RM3.1 billion sukuk fund facility and RM800 million internally generated fund.

'We are reducing our FY13 net profit forecast by 10.2% to reflect: (1) higher depreciation costs and operating costs upon the opening of KLIA2; and (2) higher finance costs.

'Nonetheless, KLIA2 project will now yield a valuation enhancement of RM1.65 a share (versus RM1.34/share previously) after adjusting our project value to RM3.9 billion assuming the same project internal rate of returns (IRR) of 10% (vis-''-vis MAHB's guidance of 11%-12%),' it said.

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