- According to the July passenger traffic snapshot released by MAHB, overall passenger numbers saw a slight decline of 0.4%. For 7MFY14, it grew by 10% YoY.

- In July, KLIA Main Terminal (MTB) international traffic declined by 5.5% YoY, while the domestic traffic decline accelerated to 21.6% YoY. On a YTD basis, international and domestic traffic grew by 5.2% YoY and 10.3% YoY, respectively.

- Sequentially, KLIA MTB traffic declined by 9% MoM.

- Klia2 international traffic grew by 15% YoY in July, but domestic traffic declined by 1.5% YoY. On a YTD basis, international and domestic traffic grew by 15.7% YoY and 0.7% YoY, respectively.

- Sequentially, klia2 traffic also recorded a decline of 8.8% MoM.

- The weak numbers for both KLIA MTB and klia2 were attributable to July being a Ramadhan month, where travel is usually more subdued.

- The significant drop in domestic traffic was partly due to more direct flights between other airports in Malaysia. Previously, flights between local non-KLIA airports would usually have to transit via KLIA.

- Recent disasters of flights MH370 and MH17 have also put on pressure on MAS operations, contributing to the international traffic decline in KLIA MTB.

- The impending MAS restructuring plan (and likely cut of loss-making routes), the geopolitical tension in the Middle East and Ukraine, and the current Ebola outbreak may pose further downside risks to the passenger numbers.

- We leave our estimates unchanged for now. Maintain HOLD.

Source: AmeSecurities