KUALA LUMPUR (Oct 18): RHB Investment Bank Research has maintained its “Buy” call on Malaysia Airports Holdings Bhd (MAHB) at RM8.04 with a lower sum-of-parts (SOP) derived target price (TP) of RM9.00 (from RM9.50).

In a note today, the research house said MAHB's share price retreated 8% yesterday, which RHB believes was due to uncertainty over the new Regulatory Asset Base (RAB) framework.

Its analyst, Alan Lim cited The Edge Financial Daily quoting Transport Minister Anthony Loke, as saying the Transport Ministry is looking at alternatives for a RAB framework for future domestic airport developments.

“Separately, Malaysia Aviation Commission has not published the final paper on the RAB framework, which will set the passenger service charge (PSC) charge – this was due to have been published on 1 Oct.” he added.

He said the alternatives to the RAB will take time to be implemented as it will take an additional one to two years to come out with a new framework as it involves many stakeholders.

According to Lim, there is still likelihood that the RAB framework will be implemented although some details may change like its validity may only apply for Phase 1 which covers the 2020-2022 period.

RHB also believes the selling is overdone, as a lower PSC charge is likely to be neutralised by a decrease in user fees payable to the government.

The previous announcement of the PSC’s reduction was done via the user fees’ contra method.

“If the new RAB framework results in a lower PSC, we believe this arrangement will remain.”

“Despite the uncertainty of the timing, we want like to highlight that any reduction in PSC charges will likely be earnings neutral for MAHB,” Lim said.

The new TP implies 25.3 times FY20F price to earnings (P/E), or -0.52 standard deviation (SD) from its average 2-year forward P/E.

As at 9.58 am, MAHB dropped 17 sen or 2.11% to RM7.87 from opening price of RM7.98 today.