We expect MAHB’s FY14 topline and EBITDA to surge 38% and 46% respectively vs its FY12 numbers, as KLIA2 is on track to commence operations by 1 May 2013. We see KLIA2 as a game changer and MAHB’s cash cow from FY14 onwards in the absence of major capex, which may see the airport operator generating annual free cash flow of at least RM420m. We maintain our BUY call, with a DCF-derived FV of RM8.00. MAHB is the top pick in our TRANSPORT coverage given its cash-generating business amid booming air travel.
Revenue boost. KLIA2, capable of handling up to 45m passengers, is expected to reach 50% capacity in its first year of operations. Come FY14, MAHB’s revenue is projected to expand 38% from the RM2.151bn the company expects to register in 2012. A significant portion of the total revenue will be derived from higher rental to be collected from KLIA2 as it will offer more than four times the retail space at the existing LCCT. Although the company’s operation costs are expected to surge by 32%, we expect the incremental flow to EBITDA to be immense, with EBITDA ballooning by 46% from RM840m in 2012 to RM1.23bn in FY14.
An aeropolis in the making. MAHB enjoys great potential in developing its massive 22,156-acre landbank. In the near term, as much as 50 acres may be allocated for a commercial business district, a free commercial zone for warehousing and logistics, and possibly a theme park. A factory outlet and a Haj pilgrimage terminal are slated for completion sometime end-2013 to mid-2014. Within the next five years, the area could also encompass a golf resort and an auto city.
Bidding for Stansted Airport. We are negative on MAHB’s bid to buy Stansted Airport as it is a mature airport with Ryanair as its biggest client, accounting for almost two-thirds of passenger feed. This will leave little room to potentially increase in aeronautical charges. However, it has been speculated that any bids for Stansted would likely be via a joint bid with a consortium, as with other overseas airport stakes currently held by MAHB. As such, should MAHB be successful in its bid for the airport, the acquisition would not make a big dent on its valuations.
BUY. Our DCF-derived FV is RM8.00, at a WACC of 9.1%. We maintain our BUY call on MAHB, which is our top aviation pick, as the airport operator continues to ride on the resilient demand for air travel as well as its cash generating business.
Revenue boost. KLIA2, capable of handling up to 45m passengers, is expected to reach 50% capacity in its first year of operations. Come FY14, MAHB’s revenue is projected to expand 38% from the RM2.151bn the company expects to register in 2012. A significant portion of the total revenue will be derived from higher rental to be collected from KLIA2 as it will offer more than four times the retail space at the existing LCCT. Although the company’s operation costs are expected to surge by 32%, we expect the incremental flow to EBITDA to be immense, with EBITDA ballooning by 46% from RM840m in 2012 to RM1.23bn in FY14.
An aeropolis in the making. MAHB enjoys great potential in developing its massive 22,156-acre landbank. In the near term, as much as 50 acres may be allocated for a commercial business district, a free commercial zone for warehousing and logistics, and possibly a theme park. A factory outlet and a Haj pilgrimage terminal are slated for completion sometime end-2013 to mid-2014. Within the next five years, the area could also encompass a golf resort and an auto city.
Bidding for Stansted Airport. We are negative on MAHB’s bid to buy Stansted Airport as it is a mature airport with Ryanair as its biggest client, accounting for almost two-thirds of passenger feed. This will leave little room to potentially increase in aeronautical charges. However, it has been speculated that any bids for Stansted would likely be via a joint bid with a consortium, as with other overseas airport stakes currently held by MAHB. As such, should MAHB be successful in its bid for the airport, the acquisition would not make a big dent on its valuations.
BUY. Our DCF-derived FV is RM8.00, at a WACC of 9.1%. We maintain our BUY call on MAHB, which is our top aviation pick, as the airport operator continues to ride on the resilient demand for air travel as well as its cash generating business.
Source: Kenanga
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