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Thursday, August 18, 2011

Malaysia Airports Holdings update (CIMB)

Malaysia Airports Holdings update – Positive surprise from airport tax hikes The hike in passenger service charge (PSC), landing and parking charges is a very positive development that triggers FY12-13 EPS upgrades of 5.5-7.9% for airport operator MAHB as well as a rise in our DCF-derived target price from RM7.70 to RM8.00. We do not expect the higher charges to deter passengers from travelling or airlines from flying in and out of the airports. We believe that MAHB will piggy-back on AirAsia’s strong growth trajectory and is a play on tourism without the excess baggage of oil price volatility.

Potential re-rating catalysts include (1) more increases in charges, (2) stronger-than expected passenger growth, (3) airline expansion, (4) industry liberalisation, and (5) announcements on land development JVs.

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