MAHB reported a set of in-line results with earnings growing
by 2% y-o-y. As expected, staff costs continued to inch higher and caused
margins to decline y-oy. With the results coming in-line, we maintain our BUY
call and FV of RM7.53. We remain
positive on MAHB as its earnings will be boosted by non-aeronautical income
earned once the KLIA2 commences operations next year.
In-line set of
results. MAHB’s results were in-line with our and consensus estimates. 1QFY12
revenue came in at RM511.1m (q-o-q: -2%, y-o-y: +12%) with core earnings at RM109.8m
(q-o-q: +19%, y-o-y: +2%). MAHB’s higher revenue compared to 1QFY11 could be
attributed to the increase in Passenger Service Charge (which was implemented
in Nov 2011), coupled by the higher spending per pax generated from MAHB’s
non-aeronautical side. Do note that for the purpose of analyzing core net profits,
we have stripped out the IC 12 accounting standard impact from construction profits
as well as the associate’s earnings/losses as these are predominantly FRS 139-related
losses from Sabiha Gokcen.
Risk on capacity cut
from MAS. 1Q passenger grew by 6.7% y-o-y with MAS cutting its capacity by
12%. However, management expects to
achieve its passenger traffic guidance of 7-8% growth and its FY12 EBITDA
target of RM822m. We anticipate the capacity cuts from MAS to be well absorbed
by AirAsia’s 12% capacity increase (including higher frequencies), along with
higher load factors from other carriers.
Cost pressure
continues. As expected, staff costs continue to creep up and take its toll on
overall margins, which declined to 40%
from 43% last year. This is the result
of a salary adjustment after the new union collective agreement took effect
late last year. Management guided that
going forward staff cost will show an increase of 4-6% to reflect annual
increments, though we anticipate it to be much higher in FY13 due to the enlarged
workforce once the KLIA2 comes on-stream by April 2013. Currently, construction
is on track with 50% of the new terminal already completed.
Recent developments. Management continues to eye opportunities for
airport acquisitions. Meanwhile, it is unknown at this juncture whether MAHB’s
current MD, who is due for retirement by June this year, will stay on until the
completion of KLIA2. We are not too worried about this as we are confident on
the rest of the management team’s capabilities.
Maintain BUY.
With its earnings affirmed, we maintain our BUY call and FV of RM7.53 (premised
on 9% WACC on its DCF). We remain positive on MAHB, whose earnings will be
boosted by higher non-aeronautical income
streams once the KLIA2 becomes operational next year.
Source: OSK188
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