KUALA LUMPUR (Feb 6): Malaysia Airports Holdings Bhd (MAHB) shares rose 3.15% in early trade this morning after its operating agreements for KL International Airport (KLIA), klia2 and other Malaysian airports have been extended by 35 years.

At 9.06am MAHB rose 20 sen to RM6.54 with 20,700 shares traded.

In a filing with Bursa Malaysia last week, MAHB said the operating agreement for KLIA, entered between the Malaysian government and MAHB and its wholly-owned subsidiary Malaysia Airports (Sepang) Sdn Bhd in February 2009, has been extended for an additional period of 35 years, from the existing 25 years to 60 years.

Malaysia Airports (Sepang) handles the management, operations, maintenance and provision of airport-related services in KLIA, Low Cost Carrier Terminal (LCCT) and klia2 in Sepang.

Additionally, another operating agreement entered between the government and MAHB together with its wholly-owned subsidiary Malaysia Airports Sdn Bhd (MASB) in February 2009 was also extended by 35 years from the existing 25 years to 60 years.

MAHB is involved in the management, operations, maintenance and provision of airport-related services in other designated airports in Malaysia such as four international airports (Pulau Pinang, Langkawi, Kuching and Kota Kinabalu), 16 domestic airports and 18 short take-off and landing ports (STOLports).

Hong Leong IB Research has upgraded MAHB to “Buy” with a higher targer price of RM9 (from RM6.60) after the government granted MAHB a 35-year extension on its existing 25-year concession of operating all the airports in Malaysia (except Senai), effective until February 2069.

In a note today, the research house, however, said the terms and conditions of the extension have yet to be finalised, pending negotiations between MAHB, government and relevant parties, which may take up to two years.

“We are positive on the extension, which will enhance MAHB’s long-term earnings and cash-flow certainties.

“With the extension of Operating Agreements (which increases our timeline of earnings and earnings projection), we upgrade MAHB to Buy with higher target price of RM9 (from RM6.60) based on DCFE,” it said.