KUALA LUMPUR (Jan 31): The gradual turnaround in Malaysia Airlines Bhd's fortunes bodes well for Brahim's Holdings Bhd as the former remains a key contributor to the group, said Hong Leong Investment Bank Research (HLIB Research).

In a statement today, the research house said Malaysia Airlines' load factor rose to 90% on Dec 16, bringing its fourth quarter for financial year 2016 (4QFY16) figure to 82%.

"Additionally, Malaysia Airlines plans to launch 11 new routes to China in 2017," the research house said.

"Brahim's has begun catering meals to Malindo Air, a contract expected to be worth RM15 million/year in revenue," said the research house, adding that the management guided Brahim's currently caters upwards of 55,000 meals a day.

The research house said Brahim's catering arm continues to look for catering contracts aside from airlines to diversify away from airlines as its main source of revenue.

The tie up between Brahim's and Singapore-based SATS Investments Pte Ltd has yielded significant synergies to the group, said the research house.

"Namely SATS has assisted Brahim's in the negotiation of higher cost structures with foreign airlines; SATS expertise assisted in the passing of a gluten test on meals imposed by British Airways; and joint procurement efforts between SATS and Brahim's are ongoing," the research house said.

To recap, as part of the agreement with SATS, Brahim's stands to receive an additional RM30 million cash incentive should its catering arm (Brahim's Airline Catering) record RM7.5 million profit after tax and minority interest (PATAMI) in 2016.

HLIB Research maintained its "hold" call with on Brahim's with an unchanged target price of 67 sen.

At 11.03am, Brahim's shares rose 1 sen or 1.41% to 72 sen. It has a market capitalisation of RM167.76 million.