A recognized airport operator. Other than managing and operating 39 airports in Malaysia – of which five are international, 16 domestic and 18 short take-off and landing ports - MAHB has extended its management expertise to four international airports outside the country. Among these overseas airports are, the Rajiv Gandhi International Airport (RGIA) in Hyderabad, Indira Gandhi International Airport (IGIA) in Delhi (both in India), Istanbul Sabiha Gokcen International Airport (SGIA) in Turkey and the Astana International Airport (AIA) in Kazakhstan. However, the company recently agreed to mutually terminate the trust management agreement for Astana International Airports. On the strength of MAHB’s track record and overseas experience, the company continues to receive proposals to manage airports in other countries. As such, the news came as no surprise.
Little financial impact. Meanwhile, information on possible new airport management deals is scarce. However, from past experience, the company normally maintains 10% to 20% equity stakes in the overseas airports it operates; hence we expect nominal financial impact to MAHB. Under certain circumstances, the company also charges other types of consultation fees on those airports but the amount is negligible in comparison to the group’s consolidated earnings.
Reiterate TRADING BUY. While we expect little excitement from the potential overseas airport management rights, we continue to favor MAHB, as it is one of the most efficient airport operators in the region. This is despite the monopolistic nature of its business. Its resilient earnings compared with other airline companies also prompt us to maintain our TRADING BUY recommendation with a 12-month target price of RM4.22. The fair value is derived from 16x FY10 EPS, in line with our in-house FBM KLCI target for 2010.
Little financial impact. Meanwhile, information on possible new airport management deals is scarce. However, from past experience, the company normally maintains 10% to 20% equity stakes in the overseas airports it operates; hence we expect nominal financial impact to MAHB. Under certain circumstances, the company also charges other types of consultation fees on those airports but the amount is negligible in comparison to the group’s consolidated earnings.
Reiterate TRADING BUY. While we expect little excitement from the potential overseas airport management rights, we continue to favor MAHB, as it is one of the most efficient airport operators in the region. This is despite the monopolistic nature of its business. Its resilient earnings compared with other airline companies also prompt us to maintain our TRADING BUY recommendation with a 12-month target price of RM4.22. The fair value is derived from 16x FY10 EPS, in line with our in-house FBM KLCI target for 2010.