THE BUZZ
MAHB's bid to acquire Stansted Airport will likely involve a consortium with YTL Corp in it, according to a newswire report. The company has adopted a similar model, via its consortium partnership with GMR, in its previous acquisitions in Hyderabad and New Delhi, where its role has been one of an operator of the respective airports. YTL is believed to be taking up the role of the developer and hence likely to command the majority stake in the bidding consortium. MAHB would not comment on the news. The bidding price for the airport is believed to be at least GBP1bn.
MAHB's bid to acquire Stansted Airport will likely involve a consortium with YTL Corp in it, according to a newswire report. The company has adopted a similar model, via its consortium partnership with GMR, in its previous acquisitions in Hyderabad and New Delhi, where its role has been one of an operator of the respective airports. YTL is believed to be taking up the role of the developer and hence likely to command the majority stake in the bidding consortium. MAHB would not comment on the news. The bidding price for the airport is believed to be at least GBP1bn.
OUR TAKE
A small investment. We have highlighted earlier that MAHB is likely to take up a small stake in Stansted and with a partner in hand. The involvement of conglomerate YTL Corp reaffirms our view. YTL is believed to be taking up the majority stake in the consortium as a property developer in view of the sizeable landbank surrounding the airport. We estimate that MAHB's stake in the consortium could likely only be 5%-10%, with the total invested amount at GBP50m-GBP100m (RM366-RM731m). This is similar to the model it adopted in its previous acquisitions in Hyderabad and New Delhi. MAHB will take on the role of an airport operator earning a fee for managing the airport, which could be to the tune of GBP5m a year.
A competitive bid. The bidding war to acquire Stansted Airport will be competitive. The other bidders are understood to be Manchester Airport Group, Macquarie Group and Incheon Airport. Note that Manchester Group is a strong contender that can tap into its client base, which includes carriers Emirates and Etihad Airways, to operate the airport.
Stansted Airport not efficiently managed. We gather that Stansted Airport is inefficiently operated, with Ryanair dominating 70% of passenger traffic. Due to its high airport chargers, passenger traffic growth has been declining, from the peak of 23.8m passengers in 2007 to an expected 17.1m passengers this year. Based on information made available to its bidders, traffic is projected to bounce to 24.6m passengers by 2019. Stansted’s EBITDA is expected to hit GBP87.3m and rise to GBP201m in the next few years. In 2008, the airport registered EBITDA amounting to GBP117m. It is understood that the expenses incurred by Stansted airport have been somewhat artificially inflated by the inclusion of expenses from the other BAA-owned airports – Heathrow, Southampton, Glasgow and Aberdeen – in an attempt to justify higher landing charges.
Valuations somewhat high. Assuming a conservative 10% increase in EBITDA on the back of tighter cost control, the bidders are expected to fork out 10-11x EBITDA for Stansted Airport, which is on the high side, since MAHB and Airports of Thailand (AOT) command valuations of just 7-8x.
Maintain BUY. We maintain our BUY call on MAHB. Having a strong partner in a consortium to bid for Stansted Airport dispels our concerns on major capex needs. Our FV of RM8.00 is unchanged.
A competitive bid. The bidding war to acquire Stansted Airport will be competitive. The other bidders are understood to be Manchester Airport Group, Macquarie Group and Incheon Airport. Note that Manchester Group is a strong contender that can tap into its client base, which includes carriers Emirates and Etihad Airways, to operate the airport.
Stansted Airport not efficiently managed. We gather that Stansted Airport is inefficiently operated, with Ryanair dominating 70% of passenger traffic. Due to its high airport chargers, passenger traffic growth has been declining, from the peak of 23.8m passengers in 2007 to an expected 17.1m passengers this year. Based on information made available to its bidders, traffic is projected to bounce to 24.6m passengers by 2019. Stansted’s EBITDA is expected to hit GBP87.3m and rise to GBP201m in the next few years. In 2008, the airport registered EBITDA amounting to GBP117m. It is understood that the expenses incurred by Stansted airport have been somewhat artificially inflated by the inclusion of expenses from the other BAA-owned airports – Heathrow, Southampton, Glasgow and Aberdeen – in an attempt to justify higher landing charges.
Valuations somewhat high. Assuming a conservative 10% increase in EBITDA on the back of tighter cost control, the bidders are expected to fork out 10-11x EBITDA for Stansted Airport, which is on the high side, since MAHB and Airports of Thailand (AOT) command valuations of just 7-8x.
Maintain BUY. We maintain our BUY call on MAHB. Having a strong partner in a consortium to bid for Stansted Airport dispels our concerns on major capex needs. Our FV of RM8.00 is unchanged.
Source: OSK
No comments:
Post a Comment