Malaysia Airports Holdings Bhd
(Dec 13, RM8.34)
Maintain sell with a target price of RM8.47: MAHB’s November 2017 operating data shows that passenger growth has started moderating towards our target of 8.4% for 2017. Having said that, November international passenger segment continued to grow at a decent 13.2% year-on-year (y-o-y) to 4.1 million passengers, led by non-Asean destinations.
However, the domestic segment contracted by 3% y-o-y to 3.8 million passengers, dragging down the overall November passenger growth to 4.8%.
On a cumulative basis, the growth in passenger movement moderated further to 8.7% from 9.2% a month ago. This was in line with our growth projections of 8.4% for 2017. According to the announcement, the strong growth in the international segment in November was mainly contributed by the Middle East, South Asia, Northeast Asia and Southeast Asia sectors. Largest increases in traffic were attributed to sectors including China, India, South Korea, Vietnam, Thailand and United Arab Emirates.
Istanbul Sabiha Gokcen airport recorded 11% y-o-y (-8% month-on-month) growth in passenger movements to 2.5 million passengers. This has driven both the international (+15.6% y-o-y) and domestic (+9%) segments. The increase in passengers has contributed to higher cumulative 11M17 growth of 4.9% versus 4.3% last month.
Effective Jan 1, 2018, the passenger service charge (PSC) rate for international destinations beyond Asean at klia2 will be RM73, being the same rate as those at other airports in Malaysia. All other PSC rates at klia2 and other airports remain unchanged. This is the latest move by The Malaysian Aviation Commission to equalise airport tax for all airports in Malaysia. We are neutral on the news as the additional PSC collections to MAHB will be equalised by marginal cost support PSC, which is a form of compensation from the government to MAHB for the difference in actual and benchmark PSC. — TA Securities, Dec 13