October 1, 2012
Malaysia Airports Holdings
MAHB MK / MAHB.KL Current RM5.56 RM6.75 RM5.90 21.4%
SHORT TERM (3 MTH) LONG TERM
Avg Daily Turnover
Target Previous Target Up/downside
1,210 m shares
Notes from the Field
Flying with the winged Lion
Malindo Airways’ unexpected entry into Malaysian skies is a positive surprise and will benefit MAHB by boosting passenger and aircraft traffic growth from 2013 onwards. Our base case is that KLIA2 will be completed on time and within the RM3.6bn-3.9bn budget. We upgrade MAHB from Neutral to Outperform as the stock has underperformed by 13% over the past year and could be catalysed by the completion of KLIA2 and Malindo’s surprise entry. The latter leads to a higher DCF, against which we factor in a new 10% discount to derive our end-2013 target price until KLIA2 completion risks pass. Our FY12-13 EPS are cut for higher staff costs. 3.9% to 5.3% to account for Malindo's entry into Malaysia. We are only assuming that Malindo expands to 70 aircraft over 10 years on the basis of rational behaviour, allowing KLIA2 to hit 70% utilisation by 2017 and 95% utilisation by 2022. The strong passenger traffic flow will improve the commercial attractiveness of KLIA2, with possibility of further rental hikes. Should Malindo expand to 100 planes in a decade, as per the official business plan, there would be potential upside to our current traffic forecasts.
Raymond Yap CFA
T (60) 3 20849769 E firstname.lastname@example.org
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Expert Opinion Customer Views
“The project [KLIA2] is on track for completion. We're just the contractor. Any commitments have to come from MAHB." Datuk Izzaddin Idris, CEO, UEM Group
KLIA2 on track?
Despite doubts publicly aired by AirAsia, MAHB insists that KLIA2 should be on track for opening in April 2013 though construction works could cut it very close to the deadline. The terminal was 60% completed as at end-August. Despite an expected drop in FY13 earnings, profits should pick up strongly from FY14 onwards due to the impact of PSC hikes at five-year intervals (2009, 2014, etc.), higher commercial revenue and stronger pax growth.
Strong op. cashflows
We are still expecting a 22% drop in FY13 earnings due to higher staff, maintenance and utility costs resulting from the opening of KLIA2. Terminal utilisation will be around 50% on opening day. The sharp fall in earnings is also attributed to higher depreciation and greater interest expenses. However, we note that depreciation is a non-cash item and MAHB's operating cashflow is expected to strengthen with KLIA2.
Malindo a major boost
We raise our 2014-20 pax traffic growth forecasts from an average of
6.4 6.2 6.0 5.8 5.6 5.4 5.2
Relative to FBMKLCI (RHS)
118 112 107 101 95 89 84 78
Revenue (RMm) Operating EBITDA (RMm) Net Profit (RMm) Core EPS (RM) Core EPS Growth FD Core P/E (x) DPS (RM) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 2,468 738 316.9 0.31 2.5% 17.80 0.15 2.66% 9.59 4.3 29.0% 1.85 10.3% Dec-11A 2,756 790 404.4 0.37 16.9% 15.23 0.17 3.03% 9.93 NA 48.5% 1.72 11.7% Dec-12F 3,213 894 495.2 0.40 8.3% 13.42 0.18 3.20% 9.62 119.9 42.1% 1.52 12.0% (3.7%) 1.13 Dec-13F 3,612 954 421.4 0.31 (21.7%) 17.96 0.14 2.51% 9.79 NA 56.2% 1.45 8.2% (3.0%) 0.98 Dec-14F 3,243 1,194 472.5 0.38 22.5% 14.66 0.17 3.07% 7.82 40.5 52.8% 1.36 9.6% 13.9% 1.02
6 4 2
Oct-11 Source: Bloomberg Jan-12 Apr-12 Jul-12
52-week share price range
5.56 5.13 6.33
SOURCE: CIMB, COMPANY REPORTS
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Malaysia Airports Holdings
October 1, 2012...
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