KUALA LUMPUR (Jan 16): CGS-CIMB Securities has downgraded Malaysia Airports Holdings Bhd (MAHB) to “hold” at RM7.20 with a lower target price (TP) of RM7.34 and said the share price has rerated 31% over the past three months on optimism over China’s reopening on Jan 8, 2023.

In a note on Monday (Jan 16), the research house said on the cost front, it expects MAHB’s Malaysia operations to see a 27% hike in utilities cost for 1H2023 due to higher consumption, but also because electricity tariffs have risen circa 40% (CGS-CIMB extended this tariff into 2H2023 as well).

It said key downside risks including a global recession that may reduce travellers’ willingness to spend on discretionary travel.

“Upside risks: stronger-than-expected recovery in bilateral pax flows between Malaysia and China, and a recovery in migrant worker flows from Indonesia. Downside risks discretionary travel.

“We lower our DCF-based TP to RM7.34; we cut FY22-24F core EPS by 13-42% as we reduce pax traffic and raise power cost forecasts for Malaysia,” it said.