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



OSK Research has lowered Malaysia Airports Holdings Bhd's (MAHB)core earnings by between 13 and 15 per cent for the 2010/2011 financial year.

It said earnings fell short because of the higher than expected provisions for doubtful debts.

For the 2012 financial year, OSK Research said it expected earnings to be flat on the back of higher operating costs and depreciation expenses although, going forward to the next five years, earnings are expected to expand at a compound annual growth rate of 6.57 per cent.

"Including Sabiha Gokcen International Airport, OSK Research derived a fair value for MAHB of RM8.47, up from RM6.26 previously, with our "BUY" call maintained.

MAHB won the right to operate Sabiha Gokcen airport, the smaller of Istanbul's two airports, which is currently operating at only 35 per cent and making losses.

"From our analysis, we believe that the 451 milion Euros airport should be free cash flow positive by the 2011 financial year on the back of its improved operating cost structure as passenger utilisation rates improve to over 60 per cent," OSK Research said. -- Bernama