MAHB to gain from Govt airport plan

IN Budget 2014, the Government announced that it would allocate a total RM1bil for the upgrading of infrastructure and facilities at some airports in the country.

RHB Research sees Malaysia Airports Holdings Berhad (MAHB) as a major beneficiary of this initiative in the long run.

The research house’s checks with the MAHB management indicates that the Budget 2014 allocation for infrastructure upgrades would unlikely translate to a higher proportion of user fees as the assets that the Government is spending on will not be revenue-generating.

In past airport upgrades in Ipoh, Kota Bharu, Kuala Terengganu, and Malacca, as well as the ongoing Kota Kinabalu International Airport upgrade, the Government’s higher capital expenditure allocation did not translate to a higher revenue for MAHB. 

Meanwhile, its discounted cash flow-based fair value (FV) is raised to RM10.13 from RM8.47, based on a weighted average cost of capital of 7% from 7.5% on the assumption of lower returns on market.

It said the RM10.13 FV implies FY14 enterprise value per earnings before interest, tax, depreciation and amortisation of 15 times.

Source: The Star Online | 29 Oct. 2013