KUALA LUMPUR (Nov 1): Analysts remain generally positive after attending a briefing with the Malaysian Aviation Commission (Mavcom) yesterday to get updates on the status of the regulated asset base (RAB) framework, slated for implementation on Jan 1, 2020.
Mavcom told analysts yesterday that the government's intention of having different passenger service charge (PSC) rates at Kuala Lumpur International Airport (KLIA) and klia2 poses a major hurdle for the implementation of the RAB framework.
During the meeting, Mavcom said the government had agreed with most of the details of the RAB, except for the equal PSC rates to be charged by both airports. Despite this however, the aviation agency gave an assurance that it will push ahead with the implementation on Jan 1, 2020.
The framework, which will guarantee returns for Malaysia Airports Holdings Bhd (MAHB) to invest in its capital expenditure for upgrading facilities and expansion, is a key factor propelling the airport operator's share price rally in the past few months.
The rally ended abruptly after Transport Minister Anthony Loke told an investment forum that his ministry was seeking alternatives besides the RAB framework for the future development of domestic airports, during which MAHB's share price tumbled 66 sen or 7.6% to RM8.04 last month.
At the time of writing, the counter is currently trading at RM7.92 per share.
RHB Research said the sell-down has lowered the valuation to 22.3 times, which means most of the negatives have already been priced in.
On that note, RHB and MIDF research have kept their Buy calls on MAHB pending the final rates to be set on the PSC for KLIA and klia2.
"We believe the news is positive, as it has reduced the risk that weighted average cost of capital (WACC) will be lowered," RHB noted, adding that the WACC for the RAB framework for the 2020-2022 period is still maintained at 10.88% with capital expenditure reduced to RM3.99 billion.
MIDF too opined that the current passenger traffic momentum will continue to provide MAHB with a strong base for incremental revenue generation moving forward.
This will be supported by accommodative visa policies in Malaysia for tourists from China and India, which will temper the pressure from the impending international departure levy, it said.
"As such, we strongly believe that MAHB passenger numbers can surpass the 100 million mark in 2019, while maintaining a relatively conservative growth rate of 3.5% which translates to 102.5 million passengers," MIDF said.