Results Update

Airport has just announced its results for QE31/3/2010. Its net profit dropped by 48% q-o-q or 21% y-o-y to RM72.5 million while turnover increased by 11.9% y-o-y but declined by 8.4% q-o-q to RM436 million. The drop in net profit was attributable to the following reasons:

1. Adoption of FRS139 which resulted in higher share of losses in an associate company, whereby the concession payable by the said company is recognized at fair value & subsequently at amortized cost. Gains & losses arising from changes in the fair value were recognized in the income statement. Stripping off the impact from the adoption of FRS139, Airport's pre-tax profit would increase by 12% y-o-y to RM139.9 million.

2. The pre-tax profit for QE31/3/2009 was positively impact by reversal of lease rental payable to the Government of RM52.0 million as well as a backdated user fee for FY2008 of RM45.8 million subsequent to the signing of the Operating Agreements.

If we factored in these reasons, we can see that Airport's financial performance remain satisfactory.


Table 1: Airport's last 8 quarterly results


Chart 1: Airport's 16 quarterly results

Valuation

Airport (closed at RM4.98 yesterday) is now trading at a PER of 15.6 times (based on last 4 quarters' EPS of 32 sen). At this multiple, Airport is trading very near its fair value.

Technical Outlook

Airport has a very strong rally in the past 17 months, rising from a low of RM2.00 in January 2009 to the present level of about RM5.00. Airport share price appears to be trapped within an ascending triangle pattern, with resistance at RM5.00. A break above the RM5.00 level would lead to a continuation of the prior uptrend. However a downside breakout below RM4.90 could lead to a bearish reversal.


Chart 2: Airport's daily chart as at May 17, 2010 (Source: Quickcharts)

Conclusion

After the recent strong rally, I believe some profit-taking for Airport may be a good idea.