Considering that this might be one of the biggest lags in terms of large cap stock after the broad market rallied 3% after the Brexit scare, there are reasons to this. It all went south when the military coup in Turkey happened last weekend.

Current Problem

Comparing this to Thailand, a military coup that had happened affects the amount of visitors going into the particular country. Since this is the case, passenger traffic going into Istanbul through MAHB’s Sabiha Gokcen Airport in Turkey were expected to drop following the military coup with the most obvious tourist numbers drop to take effect immediately.

MAHB’s Turkish operation account for half of the group’s EBITDA. This is why the stock took such a bad hit although the Turkish airport is only one of MAHB’s list of 23 airports in total. Many of these airports are in Malaysia with the exception of Rajiv Gandhi International in India.

It requires time for the military coup in Turkey to be resolve and time would reveal the actual condition there. At the current moment, there’s a lot of fear which is clearly reflected from the way the stock was sold off. But at times of fear it might turn out to be best time to accumulate good companies.

It's Kind of Expensive Though

First off, AIRPORT isn’t the cheapest piece of stock out there where valuations are low in terms of PE, coupling with good cash flow and low debt levels. In contrary, the PE was estimated to be around 60 excluding extra ordinary items, the current cash flow yield is at negative and debt to equity levels at 86%.

So why all the interest for such an expensive stock? There isn’t any airport related stock in the market that comes with the extensive portfolio of 23 airports such as what MAHB have. The closest we can get is Airports of Thailand with only 6 airports in its portfolio while many others are single airport listings such as China listed Shenzhen, Guangzhou or even Sydney Airport.

With air travel expanding at a rapid rate where you could see Air Asia buying more planes and new airlines coming into the game, this is the premium that we are willing to pay for such a huge portfolio which to be exact is double of what one could pay for going with Airports of Thailand.

Rather than investing with airlines which they have to compete with others, why not take a slower approach investing long term with airports that mainly have the monopoly power here in Malaysia.

Stock price just breached the last bottom of RM5.97 and we are sure that it would continue to go lower when the broad market weakens after this run. RM5.70 is the primary target and you should get ready when the market goes on a minor correction after this rally. But if you are comfortable with high tolerance towards the downside in the medium term then current selling price of anything below RM6 is still alright.