KUALA LUMPUR (Feb 20): Shares in Malaysia Airports Holdings Bhd (MAHB) fell 1.56% at mid-morning today, following a less-than-favourable outlook for the stock in light of the Covid-19 outbreak.

At 9.56am, MAHB fell 11 sen to RM6.94, valuing it at RM11.52 billion.

Hong Leong IB Research (HLIB Research) has maintained its “Hold” rating on MAHB at RM7.05 with a lower target price (TP) of RM6.75, from RM7 previously, based on 10% discount to a lower DCFE value of RM7.50.

In a note today, the research house said Covid-19 has affected air travel demand in Asia, particularly China and Southeast Asia sectors, as governments have been trying to contain the outbreak by locking down cities, quarantining people, issuing travel advisories and controlling their border movements.

HLIB Research said MAHB will be affected by the weakened passenger traffic in terms of passenger tariff income, aircraft landing and parking charges, and lower retail income.

The research house said it believes the impact from Covid-19 would be more severe and have longer effect as compared to SARS in 2003.

“We have cut our assumptions for passenger growth in 2020 to -3.0% year-on-year [y-o-y] (from +3.5% y-o-y), but increased 2021 to +7.0% y-o-y (from +3.5% y-o-y) on potential rebound from a low base effect," it said.