11 August 017 Corporate Update Malaysia Airports Holdings Berhad International pax growing strong Maintain BUY Unchanged Target Price (TP): RM9.98 INVESTMENT HIGHLIGHTS Pax growth remains robust in July 017 Growth led by international, with balanced growth from Asean and non-asean ISG continues to improve Maintain BUY with TP of RM9.98 RETURN STATS Price (10 Aug 017) Target Price Expected Share Price Return RM8.7 RM9.98 +14.4% July passenger traffic at Malaysian airports grew +5.%yoy despite the high base where the Hari Raya festive holidays fell in July 016. Total pax recorded was 8.m, the highest in terms of monthly pax for Malaysian airports in 017. Year-to-date, pax growth stands at +10.%yoy. Growth bolstered by international pax. International and domestic traffic growth was less even compared to June 017 as international pax outpaced registering a growth of 11.7%yoy compared to domestic pax which declined -1%yoy. The relaxation of visa requirements for China and India, the Hajj season, the favourable exchange rate and increased seat capacity were among the factors that boosted international travel. Good balance between Asean and non-asean. Delving into the composition of international pax, growth between Asean and non-asean pax displayed balanced growth, recording increases of +1.8%yoy and +10.6%yoy respectively. Passenger traffic from 1 countries registered double-digit percentage increases - Asean countries: Indonesia, Vietnam, Philippines, Cambodia and non-asean countries: China, India, South Korea, and Saudi Arabia. KLIA MTB growth tapered by KLIA still healthy. In terms of airports, KLIA main terminal s (KLIA MTB) growth tapered to +.yoy as the effects of Malindo s shift to KLIA MTB and MAB s capacity cuts in early 016 which caused a low base effect diminished. KLIA s growth remained healthy at +16.%yoy as Airasia and AAX expanded their capacity. Overall load factor for carriers stood at 77.. ISG turnaround continues. Pax traffic registered its first double-digit percentage growth in 017, with July growing +1.7%yoy. Positively, both international and domestic pax grew strongly, at +1yoy and +11.6yoy respectively, as the summer holidays travel season is in full swing. Expected Dividend Yield +1.8% Expected Total Return STOCK INFO +16.% KLCI 1777.77 Bursa / Bloomberg Board / Sector Syariah Compliant 5014/MAHB MK Main/Trading Services No Issued shares (mil) 1,659. Par Value (RM) 1.00 Market cap. (RM m) Price over NA 5-wk price Range Beta (against KLCI) -mth Avg Daily Vol -mth Avg Daily Value Major Shareholders 14,468.15 1.87 RM5.91 - RM9.45 1.41 4.16m RM6.1m Khazanah 6.71% EPF 10.% PNB.% MIDF RESEARCH is a unit of MIDF AMANAH INVESTMENT BANK Kindly refer to the last page of this publication for important disclosures
INVESTMENT STATISTICS FYE Dec FY15A FY16A FY17F FY18F FY19F Revenue* (RM mn),870. 4,17.8 4,500.7 4,75.1 4,919.5 EBITDA (RM mn) 1,679.1 1,709.9 1,50. 1,68. 1,76.9 EBIT (RM mn) 777.5 857.4 694. 88.1 918. Pretax Profit (RM mn) 41.8 18. 504. 69.1 78. Net Profit (RM' mn) 45. 7.1 4. 5.1 568. Core Earnings* (RM'm) (11.5) 77.5 4. 5.1 568. EPS (sen) (0.7) 4.7 5.5 8.8 4. EPS growth (%) (10.) 775.7 18. 58.8 90.5 PER (x) N/A 185.5 156.9 98.8 5. Net Dividend (sen) 8.5 10.0 1.0 1.0 1.0 Net Dividend Yield (%) 1.0 1. 1.4 1.4 1.5 Source: Company, MIDF Research Maintain BUY with TP of RM9.98 based on our DCF model assuming WACC of 7.8% and Beta of 1.1. We like MAHB as a proxy to Malaysia s resilient inbound/outbound travel industry, as the largest airport operator in Malaysia. MAHB received an extension of its operating agreement (OA) which will last until 069, providing clarity to investors on its longer term prospects as an airport concessionaire. Meanwhile, the company has imposed onto itself a 1-year timeframe for negotiations with the Government on the terms and conditions for its OA extension. Items of interest to us include the rate of user fee it pays to the Government and source of funding for capital expenditure, of which favourable negotiations could prompt upward revisions to forecasts. DAILY PRICE CHART Source: Bloomberg Tay Yow Ken, CFA tay.yk@midf.com.my 0-17 884
Figure 1: Monthly pax at Malaysian Airports Figure : Monthly pax at Istanbul Sabiha Gokcen 9 8 7 6 5 4 1 0 m 6.9 6.9 7. 7.0 7. 6.7 7% 4% %% 1/16 /16 /16 4/16 5/16-4% 6/16 7.9 7.5 7.5 7. 7.5 8.8 7.8 8.1 8. 8. 7.9 7.6 7. 1% 14% 1% 1 11% 9% 7% 7/16 8/16 9/16 10/16 Monthly Malaysia pax (m) 11/16 1/16 1/17 /17 /17 17% 4/17 8% 5/17 14% 6/17 7/17 Monthy pax growth (yoy) 1 1 - -1.5.5 1.5 1 0.5 0 m.0.0.7.7.7.6....4.4..4.6.7.6..1.1 19% 16% 111% 1/16 /16 /16 4/16 5/16 -% -4%- 4% % -1% -4% -6% 6/16 7/16 8/16 9/16 10/16 11/16 1/16 1/17 /17 8% 8% 4% /17 4/17 5/17 ISG monthly pax Growth yoy (%) 6/17 5 4 1% 7/17 1-1 Source: Company, MIDFR
MIDF RESEARCH is part of MIDF Amanah Investment Bank Berhad (878 - X). (Bank Pelaburan) (A Participating Organisation of Bursa Malaysia Securities Berhad) DISCLOSURES AND DISCLAIMER This report has been prepared by MIDF AMANAH INVESTMENT BANK BERHAD (878-X). It is for distribution only under such circumstances as may be permitted by applicable law. Readers should be fully aware that this report is for information purposes only. The opinions contained in this report are based on information obtained or derived from sources that we believe are reliable. MIDF AMANAH INVESTMENT BANK BERHAD makes no representation or warranty, expressed or implied, as to the accuracy, completeness or reliability of the information contained therein and it should not be relied upon as such. This report is not, and should not be construed as, an offer to buy or sell any securities or other financial instruments. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. All opinions and estimates are subject to change without notice. The research analysts will initiate, update and cease coverage solely at the discretion of MIDF AMANAH INVESTMENT BANK BERHAD. The directors, employees and representatives of MIDF AMANAH INVESTMENT BANK BERHAD may have interest in any of the securities mentioned and may benefit from the information herein. Members of the MIDF Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein This document may not be reproduced, distributed or published in any form or for any purpose. MIDF AMANAH INVESTMENT BANK : GUIDE TO RECOMMENDATIONS STOCK RECOMMENDATIONS BUY TRADING BUY NEUTRAL SELL TRADING SELL Total return is expected to be >1 over the next 1 months. Stock price is expected to rise by >1 within -months after a Trading Buy rating has been assigned due to positive newsflow. Total return is expected to be between -1 and +1 over the next 1 months. Total return is expected to be <-1 over the next 1 months. Stock price is expected to fall by >1 within -months after a Trading Sell rating has been assigned due to negative newsflow. SECTOR RECOMMENDATIONS POSITIVE NEUTRAL NEGATIVE The sector is expected to outperform the overall market over the next 1 months. The sector is to perform in line with the overall market over the next 1 months. The sector is expected to underperform the overall market over the next 1 months. 4
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