Friday 29 Mar 2024
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KUALA LUMPUR (Feb 22): Malaysia Airports Holdings Bhd's (MAHB) net earnings for FY17 missed the expectations of research houses despite growing more than threefold from a year ago.

"It accounted for 71% and 83% of ours and consensus' expectations respectively," MIDF research said in a note today. It maintained its "buy" call on the stock with a target price of RM9.80.

CIMB Research said MAHB's FY17 core net profit was 33% below forecast. As for Affin Hwang Capital Research, the earnings came in 11% below consensus forecast.

"MAHB's 2017 result was below market and our expectations. We were surprised by the higher interest expense with the increase in debt," Affin Hwang said in note today.

Yesterday, the airport operator posted its financial results for the fourth quarter ended Dec 31, 2017 (4QFY17). It reported a 16.4% drop in net profit to RM27.86 million from RM33.32 million previously, dragged down by higher total costs due to an increase in amortisation and depreciation.

Partly offsetting the losses were higher revenue in the quarter — up 15.44% to RM1.25 billion, from RM1.08 billion a year ago.

For its full FY17, MAHB's net profit more than tripled to RM236.49 million against RM70.39 million in FY16, mainly thanks to higher revenue despite a 6.8% increase in costs.

It proposed final single-tier dividend of 8 sen per share for the financial year ended Dec 31, 2017 (FY17).

Moving forward Affin Hwang Capital's senior associate director, Loong Chee Wei, said uncertainty on the new aeronautical charges framework to be introduced will dampen sentiment on the stock. The research house maintained its "hold" rating on the stock with a slightly higher target price of RM9.

The Malaysian Aviation Commission intends to begin a gradual rollout of the Quality of Service (QOS) framework from July 2018, and the Regulatory Asset Base (RAB) framework for aeronautical tariff determination is scheduled for implementation from 2020.

CIMB also said the implementation may pose future risks as the group will likely incur additional capital expenditure to prepare for the changes, "in particular for its aerotrain and baggage handling systems, in order to avoid QOS-related penalties of up to 5.03% of its aero revenue".

"We believe that the RAB framework may cap the long-term returns for MAHB, as its fundamental aim is to ensure that the airport's return on invested capital (ROIC) matches its weighted average cost of capital (WACC)," it said.

CIMB maintains "reduce" on the stock with a lower target price of RM7.16, the lowest among Bloomberg's consensus.

At 11.17am, MAHB dipped 1.01% or 9 sen to RM8.80 with 272,900 shares traded.

 

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