Malaysia Airports' 9M17 earnings beat expectations

Malaysia Airports Holdings Berhad (MAHB) will continue to outperform this year, said CIMB Research.

MAHB’s 9M17 core net profit made up CIMB's 75% full-year forecast, which is above expectations since the 4Q is the seasonally-strongest quarter in Malaysia.

TURKEY OPERATIONS BOOSTED EARNINGS

CIMB said the outperformance was driven by better-than-expected Istanbul Sabiha Gokcen (ISG) airport performance as tourist arrivals into Turkey recovered.

To contrast, Malaysia’s 3Q17 profits were within expectations.

MAHB delivered a 3Q17 core net profit of RM85m, up 59% year-on-year (YOY).

Malaysia’s core net profit rose 35% YOY on account of a 6% rise in pax traffic, leading to an 11% rise in revenue as the pax mix moved in favour of international pax, coupled with lower depreciation charge after its concession was extended from 2034F to 2069F.

According to CIMB, "the profit performance would have been even better if not for a RM25.6m provision for doubtful debts, which MAHB booked against late-payment charges accrued against its customers" signalling the confidence that the research house has on MAHB.

OUTLOOK?

CIMB Research is raising their full year 2017 to 2019 forecast earnings per share (EPS) forecasts by 12-21% and raising SOP-based target price to RM10.56, rolling over to end-CY18F.