KUALA LUMPUR (Dec 13): RHB Investment Bank (RHB IB) has maintained its “Buy” rating on Malaysia Airports Holdings Bhd (MAHB) at RM7.89 with an unchanged target price (TP) of RM9.25 and said its TP implies 25.3x FY20F P/E, or -0.52SD from Malaysia Airports’ average 2-year forward P/E.

In a note today, RHB IB said Malaysia Aviation Commission (MAVCOM) will be dissolved and its functions placed under the Civil Aviation Authority of Malaysia (CAAM).

It said although this means there should be significantly higher uncertainty on the Regulatory Asset Base (RAB), current valuation at -1.16SD has more than priced in this potentially negative news.

RHB IB said the current share price reflects FY20F P/E of 21.1x or -1.16SD over MAHB’s 2-year P/E.

Hence, it said that most of the uncertainty surrounding RAB or other frameworks have been priced in.

“Pending the new model for the aviation sector, we maintain our FY19F-21F earnings.

“Even with the current Operating Agreement, we expect strong earnings growth of 13% for MAHB in FY20.

“This is supported by passenger volume growth estimated at 5% and a turnaround at Istanbul Sabiha Gokcen International Airport,” it said.