KUCHING: Seasonal factors as well as the 14th General Elections in the second quarter of 2018 (2Q18) are expected to stimulate better domestic traffic in airports under Malaysia Airports Holdings Bhd (MAHB).
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) believed that for the coming second quarter of 2018 (2Q18), traffic growth will persist due to seasonal factor as well as key event namely the 14th General Election taking place during the period.
“These happenings are expected to stimulate better domestic traffic in airports under MAHB, which we believe will lead to a rebound in overall domestic traffic growth for airports in Malaysia,” it said.
MIDF Research viewed that the industry in particularly operated by airports and low-cost carriers will sustain its positive earnings momentum based on the encouraging trend of passengers traffic as well as aggressive capacity expansion by the likes of AirAsia Bhd (AirAsia) and AirAsia X Bhd (AirAsia X).
Despite the risks of rising fuel prices, the research arm believed both low cost short and medium-long haul business to remain buoyant, underpinned by its continuous improvement in operational cost.
“Better competitive environment is expected mainly in the domestic segments stemming from capacity withdrawal.”
Given its optimistic view on the low-cost airlines business, MIDF Research maintained its ‘buy’ calls for AirAsia and AirAsia X with target price of RM4.80 per share and RM0.46 per share, respectively.
MIDF Research also highlighted that consequently, MAHB is poised to benefit from these encouraging developments i.e. net addition of aircraft and higher utilisation rates by airlines, providing support to aeronautical revenue.
Considering overall industry’s demand to remain robust in the second quarter of financial year 2018 (2QFY18), the research arm continued to like MAHB due to the group’s exclusive exposure to Malaysia travel demand.
As such, MIDF Research recommended investors to accumulate MAHB with a ‘buy’ call and target price of RM9.80 per share.