KUALA LUMPUR: Malaysia Airport Holdings Bhd (MAHB) Turkey operations is expected to note positive growth, while passenger growth is expected to grow 7 per cent and 10 per cent for Turkey and Malaysia respectively for the financial year ending, December 31 (FY17).
Kenanga Research expects Turkey passenger volume to improve by 7 per cent from the current growth rate of 4 per cent, supported by the referendum held on April 16, 2017, a positive development for Turkey’s tourism.
The research house said the potential re-rating catalysts are due to stronger than expected recovery in Turkey and higher than expected passenger growth in Malaysian operations.
"The referendum adopts a presidential system of government that will make Turkish democracy more resilient by putting an end to the existing weak coalition of governments, which could possibly deter future military interventions," it said.
Kenanga noted MAHB’s Turkey airport operation improved in October in terms of passenger growth, which registered year-on-year (YoY) growth of 6.6 per cent, an increased of 10.3 per cent and 4.9 per cent for international and domestic passenger growth, respectively.
"We deem broadly inline on expectation of a stronger fourth quarter (Q4) 2017 MAHB due to seasonality factors."
Kenanga noted in the first nine months 2017, MAHB’s core net profit registered RM166 million, accounting for 68 per cent from its estimation.
"We make no changes to our FY17 and FY18 earnings forecasts and maintain our target price of RM8.38, given the better earnings prospects from the new passenger service charge structure and the operating agreement extension.”
CIMB Research said it also raised MAHB’s for FY17 to FY19 core earnings per share forecasts by 12-21 per cent with a target price of RM10.56 by the end of 2018.
This was attributed to both Malaysia and Turkey good results, promising recovery at Instanbul Sabiha Gokcen (ISG), revising up ISG passenger traffic growth and potential for additional valuation in ISG.
CIMB expects Malaysian passenger traffic growth would most likely be focused on higher-value international traffic.
"AirAsia is planning to add some seven to eight aircraft in in the second half this year, which would spill over into FY18, and a further four to five planes in 2018 to take advantage of competitors’ capacity withdrawals," the research house noted.
AirAsia X would take delivery of three A330 leases in second half 2018, while MAS would receive six A330 leases over February to September next year.
CIMB said MAHB’s catalyst could arrive by second half next year, citing the airport operator’s negotiations with the government on the terms of the concession to be completed.