Project is viable. We conclude that the revised KLIA2 project is viable with IRR of 12.2%-13.1% based on MAHB's revised capex cost of RM3.6b-3.9b. The new IRR is slightly lower than our estimate of 14.1% at RM2.5b capex with more amenities and automation added into the terminal. But we believe this is an infrastructure that will serve the needs of the industry for decades to come. We maintain our BUY recommendation, with a lower DCF-based target price of RM7.00/share (from RM7.55) due to the initial cashflow burden impact.

Maybank research (9 December 2011)

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