AmResearch starts coverage on MAHB, fair value RM10.10

by **Cals** Thu 23 Jan 2014, 09:35

Business & Markets 2014

Written by theedgemalaysia.com

Thursday, 23 January 2014 08:43

KUALA LUMPUR (Jan 23): AmResearch has initiated coverage on Malaysia Airports Holdings Bhd (MAHB) with a Buy rating at RM8.85 and a fair value of RM10.10.
In a note Thursday, the research house said its investment thesis was premised on the following:- (i)The opening of klia2 by May 2 2014, which would contribute to the group’s EBITDA growth of 11%-16%. Overall commercial space would more than double, leading to substantially higher rental and retail revenue of about 25%-30%. (ii) A significant increase in the passenger service charge in FY14 due to decent passenger growth of 12% and a rate hike that is due for review every five years. (iii) The negotiation on the extension of the concession period by another 35 years to 2069, which would decrease the depreciation/amortisation of the capex incurred for klia2.
AmResearch said the negotiation was expected to be completed by the first half of 2014, which will boost FY14-16F earnings by 23%-34%.
“Extending our DCF valuation by further 35 years results in a rise of our TP to RM15.50/share. (iv) The potential monetisation of its 6,750 acres of land bank approved for commercial development into an airport city, dubbed the KLIA Aeropolis.
We expect FCF to turn positive in FY14 as the capex cycle would have peaked in FY13.
“MAHB has a dividend payout policy of 50% of its net earnings, translating to yields of 2%-3%. The stock currently trades at an FY14 PE of 22x, with a historical mean level of 16x.
“We believe our target price of RM10.50/share - which implies a PE of 25x - is justified, given that MAHB is virtually the only airport operator in Malaysia and the opening of klia2 will bring MAHB to the next phase of accelerated growth,” it said.

by **Cals** Thu 23 Jan 2014, 09:37

indeed interesting

AmResearch starts coverage on MAHB, fair value RM10.10

AmResearch starts coverage on MAHB, fair value RM10.10

Re: AmResearch starts coverage on MAHB, fair value RM10.10