- We maintain HOLD on Malaysia Airports (MAHB) with a lower fair value of RM5.71/share (from RM6.50/share previously), based on 25% discount to our SOP value.

- MAHB posted a 3QFY15 core net profit of RM37mil, leading to a narrowing of losses to RM11mil for 9MFY15. We maintain our full-year core net profit projection of RM39mil, vs. consensus’ RM79mil.

- The core loss for 9MFY15 included a gain on investment of RM82mil and a forex gain of RM63.5mil due to the translation gain on the settlement of an earlier EUR279mil bridge loan.

- No additional interim dividend was declared. It had earlier declared an interim dividend of 4 sen/share for FY15.

- With an unadjusted EBITDA of RM1,292mil for 9MFY15, the group has achieved 86% of its full-year target of RM1.5bil.

- MAHB’s performance has largely been impacted by rising costs stemming from the opening of KLIA2, due to higher opex, depreciation and financing charges.

- MAHB handled a total of 29.7mil passengers in 3Q15, a 10.5% YoY growth – domestic movements rose 13.7% while international movements increased by 6.8%. In contrast, 1Q15 and 2Q15’s growth registered at -1.2% and +1.2%, respectively.

- For 9M15, the group achieved total passenger movement growth of 5.9%. MAHB expects passenger growth of 3% for its Malaysian airports, and 15% for Turkey.

- Among the airlines, British Airways returned to KLIA in May and All Nippon Airways in September. MAHB expects Air China and Hainan Airlines to resume flights to KLIA in 4Q15.

- Meanwhile, its Turkey activities continued to register a positive quarterly operating profit, with a PBT of RM38mil, but a loss of RM52mil was posted due to the amortisation of fair value of concession rights.

- As at 30 Sept, 2015, foreign shareholding in MAHB stood at 19.02%, up from 18.91% as at end-2014. MAHB remains committed to paying 50% of its net profit, adjusted for non-cash items.

- We maintain our numbers and HOLD call, as the group settles down to new realities with existing operations at KLIA2 and Turkey, as well as pending news of any hikes in PSC charges.

Source: AmeSecurities Research - 28 Oct 2015