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Malaysia Airport Holdings Could See Persistent Weak Passenger Traffic In 2016
Malaysia Daily Bulletin | 26 October 2015
By:
  • Malaysia Airport Holdings (MAH) reported 9M15 traffic statistics that are weaker than expected, rising only 1.8 percent against CIMB IB Research’s 2.5 percent full-year growth forecast, dragged down by lower than expected international traffic growth.
  • The research house noted that traffic at Kuala Lumpur International Airport’s (KLIA) Main Terminal Building, which attracted higher passenger service charges (PSC), fell 7.2 percent in 9M15, while the lower-PSC KLIA2 saw traffic rise 8.7 percent. The deteriorating mix is bad for the group’s average revenue per passenger.
  • Furthermore, MAH is expected will feel the full-year impact of Malaysia Airlines’ (MAS) capacity cuts from August this year. Though expansion by other airlines will mitigate the impact, traffic growth could remain in the low single digit.

Significance: Given the lack of catalysts for MAH in the immediate future, the ongoing slow passenger traffic growth, capacity cuts by MAS, and significantly higher cost base after the commissioning of KLIA2, CIMB Research has maintained its ‘Hold’ rating in the stock, with a target price of RM5.43.


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