KUCHING: Airport operator Malaysia Airports Holdings Bhd (MAHB) continues to bank heavily on the potential growth in commercial sales to project earnings over the near term.
“The management is targeting passenger spending per pax to grow from RM36 currently to RM50 by 2014,” stated OSK Research Sdn Bhd (OSK Research) in its research report.
“By then, MAHB would be expecting the commercial sales to make up 50 per cent of its terminal revenue.”
With its financial year 2010 (FY10) commercial sales estimated to grow by more than 25 per cent, MAHB continued to maintain an aggressive target of a 20 per cent growth in sales for FY11.
According to the research house, the space for several new food and beverage as well as retail outlets was enlarged in addition to MAHB’s recent ‘Indulge Till You Fly’ campaign, which chalked up RM30 million in sales.
With Changi effectively increasing its landing fees this year, MAHB would be attracting more carriers to use Kuala Lumpur International Airport (KLIA) as their hub for the Asean-Australia route, given its substantially lower landing rates.
This trend, according to OSK Research, would boost aeronautical income going forward.
Of late, there were more flight frequencies from the Middle Eastern carriers transiting through KLIA for their Jakarta and Australia flights.
Although the aggressive expansion by Middle Eastern carriers over the next few years would bode well for MAHB via increased frequency and bigger aircraft, this would also lead to intensifying competition among the full service carriers, highlighted OSK Research.
The research house noted that MAHB’s total passenger movement of 57.83 million in 2010 was within its forecast of 52.7 million.
While the year-on-year passenger traffic growth of 6.5 per cent for the fourth quarter had moderated from the 10.3 per cent in the previous quarter, the traffic momentum continued to be encouraging, albeit at a slower pace.
OSK Research pointed out both passenger and aircraft movement continued to be driven by the international segment as more routes and frequencies were introduced.
Thus, OSK Research pegged the company at a target price of RM8.47 per share.