Malaysia Airports Holdings - July Passengers' Traffic Beckoned

Date: 13/08/2018

Source  :  MIDF
Stock  :  AIRPORT       Price Target  :  9.88      |      Price Call  :  BUY
        Last Price  :  8.51      |      Upside/Downside  :  +1.37 (16.10%)


  • Total passenger movements for MAHB advanced +4.2%yoy in July 2018
  • International passengers grew by +5.1%yoy
  • Encouraging trend for the month of July
  • 2HFY18 looking good to hit estimate
  • Maintain BUY on the stock with TP of RM9.88

Passenger traffic in July enhanced. The July passenger traffic for airports in Malaysia marked another positive improvement, growing by +2.2%yoy (+4.2% including ISGA), recording a total of 8.6m passengers. Notably, both domestic and international sectors posted record passenger movements for a month, surpassing of last year’s December. Despite this, we take note of the slowdown in growth which we attribute to the high base effect in the same period last year, due to Eid al-Fitr holiday season in July 2017.

International sector maintained its positive trajectory. Domestic traffic in July declined marginally by -1.0%yoy to 4.0m passengers. While the overall domestic numbers continued to trend down, KLIA2 was able to sustain its growth momentum, handling +9.2%yoy more domestic passengers. Meanwhile, airports in Malaysia continued to attract passengers in the international sector, growing by +5.1%yoy. The momentum has been consistent over the past few months, which we opine will help to expand the traffic percentage of high value passengers moving forward. Accordingly, we expect the seasonal factors such as China Golden Week and school holidays will continue to lend support to MAHB’s traffic for the rest of the year.

2HFY18 looking good to hit estimates. We believe the strong momentum of traffic flow primarily international to continue, underpinned by the robust air travel demand. Chinese tourists are expected to be the driver. Recall, tourist from China accounted for 13.2% of Asian tourists, in which the number of passengers have grown at a CAGR of +12.2% annually. Given this positive development along with the supportive visa policies in Malaysia, our optimism on MAHB’s prospect remains strongly intact. Accordingly, we maintain our BUY call on the stock with an unchanged TP of RM9.88 While the upside may be less than our threshold for a buy (>+10%), we are maintaining our call for now pending the announcement of its quarterly results in August 2018.

Source: MIDF Research - 13 Aug 2018

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