Highlights/ Comments

• MAHB (M’sia) registered a drop of 5.3% yoy in total passenger movements, affected by MAS capacity rationalization, RM depreciation (less travels by the locals) as well as haze situation (cancellation for more than 1,000 flights especially on domestic sector). YTD, the growth was +1.2% yoy (vs. HLIB’s +2.2% yoy for FY15).

• 
• On sector basis, South East Asia was lowered due to haze situation, while Oceania was also affected by AAX capacity cuts. China maintained positive growth despite haze situation.
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Risks

• World crisis (ie. war, tourism and epidemic outbreak); Shutdown and high maintenance for KLIA2; Development of high speed train between Singapore and Malaysia;

Forecasts

• Unchanged.

Rating

BUY

Positives

• Monopoly of airports operation in Malaysia (except Senai ); and Main beneficiary of strong air traffic into Malaysia, in line with government initiatives to boost tourism sectors.

Negatives

• Low liquidity; Restructuring of MAS; and Shortterm impact from haze.

Valuation

• Maintained BUY with unchanged TP: RM6.30 based on DCF.

Source: Hong Leong Investment Bank Research - 12 Nov 2015