KUALA LUMPUR (Jan 15): Global rating agency Moody's Investors Service has revised upwards its ratings outlook on Malaysia Airports Holdings Bhd (MAHB) to stable from negative, saying the change reflects the strengthening of the airport operator's credit profile due to stabilisation in its overseas operations and continued resilience in its domestic market.

It also retained MAHB's A3 issuer rating.

"The stable outlook is also supported by our expectation of continued robust traffic growth in Malaysia, especially for the higher yielding international passenger segment, which grew at 14.1% in 2017," Moody's vice president and senior credit officer Ray Tay said in a statement today.

"Passenger traffic growth in 2018 will continue to benefit from stablisation of the operating environment for MAHB's wholly-owned subsidiary Sabiha Gokcen International Airport (SGIA), which owns and operates the second largest airport in Istanbul, Turkey," he added.

He noted that Moody's base case scenario conservatively assumes mid-single digit growth in total passengers for 2018 and 2019 for the Malaysian operations. "Such growth assumption supports resilience in MAHB's credit profile should actual traffic growth taper off compared to the robust growth seen in 2017."

For SGIA, although the 5.6% growth recorded for 2017 is lower than before the 2016 coup attempt, Moody's expects mid-single digit growth to continue in the next one to two years.

"We expect growth in 2018 to continue to be led by international passengers, who pay a much higher passenger service charge than that for domestic passengers," said Tay.

However, Moody's pointed to the ongoing negotiations regarding the extension of MAHB's operating agreement with the Malaysian government, where the uncertainty around the process is a credit challenge.

Tay said the rating agency expects the process to be protracted, given the complexity of the issues involved.

At 3.22pm, MAHB shares were up one sen or 0.11% at RM9.08, with 386,700 shares done, bringing a market capitalisation of RM15.05 billion.