KUALA LUMPUR (May 2): Malaysia Airports Holdings Bhd (MAHB) shares rose to a two-year high today, on first-quarter 2017 profit surprise, driven by its Malaysian operations.

The stock rose as much as 6.6% to hit an intraday high of RM8.10 in early trade before closing the morning session up 40 sen or 5.26% at RM8, with 7.19 million shares traded and a market capitalisation of RM13.34 billion.

The stock has been trading in a 52-week range of RM5.76 to RM8.10. Year to date, MAHB's share price has risen 25% from RM6.06 on Dec 30, 2016.

On Friday, the airport operator said its net profit more than tripled to RM62.02 million in the three months ended March 31, 2017 (1QFY17) from RM17.01 million a year ago, while revenue grew 7.3% to RM1.09 billion in 1QFY17 from RM1.02 billion in 1QFY16.

MAHB said its Malaysian operations recorded a 17.3% increase in pre-tax profit to RM200.3 million in 1QFY17. However, this was offset by a bigger loss in its overseas operations, which posted a pre-tax loss of RM100.4 million from RM74.4 million in 1QFY16.

In a note today, HLIB Research said it remains positive on MAHB's outlook, backed by strong air travel growth in Malaysia and potential growth recovery in Istanbul Sabiha Gökçen International Airport (ISGA), as well as long-term growth from KLIA Aeropolis.

"ISGA has been witnessing improving passenger traffic and increasing resumptions of flights in recent months, indicating potential recovery in 2017. Furthermore, management has guided no further write-off of deferred tax for ISGA in FY17 (versus RM20 million to RM30 million in 2HFY16)," the research firm said.

"ISGA is also in the midst of increasing its capacity by 24% (current utilisation rate stands at 90%) to 41 million passengers per year, positioning it to leverage on the recovery of air travel," it added.

HLIB Research is reiterating a "buy" call on MAHB, with an unchanged target price of RM8.60.