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Friday, 13 January 2017

(The Edge) MAHB FY17 passenger growth seen at 6% (M’sia), 7% (Turkey)

Malaysia Airports Holdings Bhd
(Jan 11, RM6.10)
Reiterate outperform with unchanged target price (TP) of RM7.31:
Total passengers in December (including ISG) were up 5.3% year-on-year (y-o-y) mainly driven by its Malaysian operations.

For FY17, we maintain our growth targets of 6% and 7% for Malaysian and Turkey operations, respectively. Reiterate outperform with unchanged TP of RM7.31.

Malaysia and Turkey passengers of 88.8 million (+6.0%) and 29.6 million (+4.8%) were within expectations making up 100% and 98% of our targets, respectively. For Malaysian operations, growth was mainly contributed by increased travel demand where 27 airlines (local and foreign) registered double- to triple-digit growths at the international front, prompting all their five international airports to register a growth range of 3%-13.6%.

For December, airport passengers (including Istanbul Sabiha Gokcen [ISG]) recorded growth of 5.3% y-o-y mainly due to their Malaysian operations which increased 7.2% y-o-y. Malaysian international and domestic passengers were up 9.6% and 4.9%, respectively. The overall increase was mainly due to greater travel demand coupled with new foreign airlines and existing domestic carriers operating at increased frequencies.

In December, Kuala Lumpur International Airport (KLIA) Main registered a growth of 29.9% y-o-y with international and domestic passengers registering positive growth of 26.7% and 39.3%, respectively. The growth is mainly supported by Malaysia Airlines Bhd’s increased frequencies coupled with Malindo’s and Lion Air’s shift from klia2 to KLIA Main since March 2016.

Y-o-y to year to date, KLIA Main registered record growth of 10.9% (against previous months’ growth of -12.9% to +9%). Meanwhile, klia2 showed negative growth of 5.3% y-o-y (international: -4.1%; domestic: -7.7%) due to passenger traffic moderating from Malindo’s and Lion Air’s shift in operations.

ISG International Airport passenger growth for December was down 1.5% y-o-y dragged by itsinternational traffic declining 4.6% y-o-y while domestic growth was flattish (+0.1%). We believe travel sentiment from the international front will continue to remain weak from the travel concerns in Turkey.

Moving into FY17, we are maintaining our growth targets of 6% and 7% for Malaysian and Turkey operations as we expect Malaysian passenger growth to remain strong from strong travel demand coupled with increased capacities from airlines (AirAsia and Malindo), while Turkey’s international passenger traffic is expected to remain subdued. — Kenanga Research, Jan 11