KUALA LUMPUR (Feb 20): Hong Leong IB Research has maintained its “Hold” rating on Malaysia Airports Holdings Bhd (MAHB) at RM7.05 with a lower target price (TP) of RM6.75 (from RM7) and said Covid-19 has affected air travel demand in Asia (particularly China and South East Asia sectors), as governments have been trying to contain the virus outbreak by locking down cities, quarantining people, issuing travel advisories and controlling their border movements.
In a note today, the research house said MAHB will be affected from the weakened passenger traffic in terms of passenger tariff income, aircraft landing & parking charges and lower retail income.
HLIB said it believes the impact from Covid-19 would be more severe and have longer effect as compared to SARS 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.
“Maintain Hold on MAHB with lower TP: RM6.75 (from RM7.00) based on 10% discount to a lower DCFE value: RM7.50,” it said.