KUALA LUMPUR (Feb 13): Malaysia Airports Holdings Bhd's (MAHB) net profit surged 1,697% to RM662.88 million for the fourth quarter ended Dec 31, 2014 (4QFY14) from RM36.9 million a year ago, mainly due to the gain arising from re-measurement of fair value of investment amounting to RM502.5 million.

"The group had also recognised a gain on bargain purchase of RM379.1 million arising from the acquisition of İstanbul Sabiha Gokcen Uluslararası Havalimani Yatirim Yapim ve Isletme AS (ISG)and impairment of goodwill arising from the acquisition of LGM Airport Operations Trade and Tourism Inc (LGM) of RM229.4 million," said the airport operator in a filing with Bursa Malaysia this afternoon. 

Revenue, however, declined 36.5% to RM711.33 million from RM1.12 billion in 4QFY13. Earnings per share grew to 49.06 sen from 2.96 sen a year ago. 

"Airport operations’ revenue include construction revenue. This construction revenue is in relation to the construction of klia2 and the expansion of the Penang International Airport which were completed in May 2014 and June 2013 respectively.

"For the current quarter under review, owing to the completion of both airports, there is no construction revenue recognised compared with RM437.2 million accounted for in the corresponding quarter last year," said MAHB (fundamental: 0.5; valuation: 0.6).

"If the construction revenue is excluded from both periods, the airport operations’ revenue was 4.3% higher than the corresponding quarter last year," it added.

For the full year ended Dec 31, 2014 (FY14), MAHB posted a 98.3% increase in net profit of RM 748.52 million from RM377.48 million the previous year. 

Revenue for FY14, however, declined 18.4% to RM3.34 billion from RM4.1 billion in FY13. 

"Lower revenue for the financial year under review was due to lower construction revenue by 60% or RM973.5 million as a result of completion of klia2 project in April 2014," said MAHB. 

Looking ahead, MAHB expects 2015 passenger traffic to record 85.8 million movements, a growth of 3% from 2014, as it is more cautious in light of the market outlook.

"There is room for further optimism for 2015, being the Malaysia Year of Festivals campaign as well as the return of British Airways to Malaysia," it said. 

Following the completion of the acquistion of ISG and LGM, ISG’s passenger movement is expected to grow by 15%, in which 19% growth is expected from the international sector and 12% from the domestic sector.

At 4.30pm, MAHB shares were unchanged at RM7, with a market capitalisation of RM9.64 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)