Stock Name: AIRPORT
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Research House: KENANGA



Kenanga Research has downgraded Malaysia Airports Holdings Bhd (MAHB) recommendation to a ''hold'' from a "buy" citing the company''s recent activities as reasons.

The company recently awarded a 25-year RM486 million concession to WCT Bhd to Built-Operate-Transfer of retail space near the Low Cost Carrier Terminal (LCCT).

"We are positive on the news as this will grow MAHB's retail business in tandem with the growing passenger traffic, however there is no immediate impact but a positive long term," Kenanga said in a research note today.

It said, the joint-venture between WCT-MAHB will form a company with a 70:30 equity structure to undertake the project and is targeted to be completed by June 2012.

However, "MAHB will likely earn dividend income from the company but not until 2014 at the earliest based on our estimates," the research company said.

A two-year gestation period is estimated to allow the company to ramp up occupancy and undertake some cost recovery, generating RM240 million in revenue a year.

Kenanga, meanwhile, maintained the company's five per cent passenger growth and earnings forecast for the financial year ending 2010.

"Although we are positive on the potential retail income contributions and its growth prospect, timing, however will most likely be two years from now," it said.

Despite downgrading its recommendation, Kenanga has raised MAHB's target price to RM6.10 from RM5.84 previously.

Meanwhile, it expects the construction of KLIA to touch RM2.5 billion with the runway contract to be contracted out soon at an estimated RM400 million.

"MAHB is likely to utilise RM500 million from its recent RM3 billion bond issues to refinance its bridging loan facilities," it said. -- Bernama