RHB Research ups MAHB’s TP to RM9.50

KUALA LUMPUR, RHB Research is keeping a ‘buy’ call on Malaysia Airports Holdings Bhd (MAHB) for its attractive valuation and sustainable earnings visibility, with a higher sum-of-parts-derived target price (TP) of RM9.50 from RM9.20 previously.

The research house said the news of lower passenger service charges (PSC) and the recent glitch at the Kuala Lumpur International Airport (KLIA) and klia2 have minimal earnings impact.

At this juncture, we estimate that there may be a penalty of up to RM2 million to be paid by MAHB to the Malaysian Aviation Commission (MAVCOM), related to the time period of four days during which the service quality was affected under the Quality of Service (QoS), it said in a note.

In addition, the top three clients of MAHB — Malaysia Airlines, AirAsia and Malindo — have already stated that they would not file any lawsuits against MAHB.

Our estimate of a RM2 million amount in earnings impact relies on the assumption that no other airline will sue MAHB, it added.

It said the diminished revenues following the lower PSC will be neutralised by lower expenses in the form of lower user fees paid to the government.

We increased the value of MAHB’s Malaysia operations after lowering beta, to reflect the increased certainty of its earnings prospects.

MAVCOM should announce the new PSC in two to three weeks’ time for the implementation on Jan 1, 2020, and this would bring some clarity on MAHB’s sustainable earnings going forward, it said.

At 4 pm today, MAHB’s share price went up 10 sen to RM8.60, with 254,200 units changing hands.

Source: BERNAMA (News Agency)