KUALA LUMPUR (April 6): Malaysia Airports Holdings Bhd (MAHB) saw its share price fall as much as 18 sen or 2.71% to RM6.47, and emerged as the top loser at mid-morning today.

This was following the news reports of Kuala Lumpur Aviation Fuelling System Sdn Bhd (KAFS) seeking an estimated RM456 million from the group for alleged losses and damages related to changes of the concession period under the Airport Facilities Agreement.

At 10.30am, MAHB pared some losses, but remained low at RM6.48. The counter saw 38,300 shares traded, for a market capitalisation of about RM11 billion.

Year to date, MAHB has risen 17.11%. According to Kenanga Research, the rebound was due to a satisfactory result performance for the fourth quarter ended Dec 31, 2015 (4QFY15) after three consecutive quarterly disappointments in FY15.

The group registered a net loss of RM42.9 million in 4QFY15, but its full year remains profitable as it posted a net profit of RM37.84 million in FY15.

However, Kenanga Research maintained its "underperform" call on MAHB with an unchanged target price of RM5.24 because of the absence of re-rating catalyst and the recent negative news flow of the hike in Department of Civil Aviation Malaysia charges and arbitration between MAHB and KAFS.

"MAHB's outlook remains uninspiring from weak passenger growth with management targeting 2.5% growth against our 3% for Malaysian operations," the research house said in a note to its clients today.

MAHB has set their key performance indicator targets expecting a marginal growth of 2.5% in passenger traffic for its Malaysian operations and 15% for its Turkey operations, i.e. Sabiha Gocken International Airport (SGIA).

Kenanga Research opined that the target is realistic given since the group has registered 5.5% and 21.8% up to February for Malaysian operations and SGIA respectively.

"While the two months growth of 5.5% for its Malaysian operations might seem to be stronger than our and management's target of 3% and 2.5% respectively, we are keeping our growth assumptions at this juncture as we are expecting passenger traffic to taper off in coming months due to the lack of festive seasons," it added.

However, Kenanga Research deemed that MAHB has to strive harder to improve its passenger traffic growth in Malaysia and lower its operational costs stemming from klia2; thus, it does not see any catalyst for the counter in the near term unless the group is able to secure the extension of its operating agreement.