Malaysia Airports lowered to ‘hold’

PETALING JAYA: HLIB Research has downgraded Malaysia Airports Holdings Bhd (MAHB) to “hold” from “buy” and slashed its target price by 8%, citing the political unrest and terrorist threats in Turkey would exert pressure on MAHB’s short term outlook.
In a note yesterday, analyst Daniel Wong said the recent terrorist attack incident in Turkey Atartuk airport would worsen worldwide concerns on the safety of travelling into the country, given the instability of the political situation as well as terrorist threats.
Wong said the passenger traffic flows (tourist flows) in Istanbul Gokcen International Airport (ISGA) would likely weaken and potentially fall year-on-year in coming months, after recording strong double digit growths for the past years.
“We reckon the rising uncertainty in Turkey is affecting ISGA turnaround.”
“We downgrade MAHB to “hold” (from “buy”) with lower target price of RM6.90 (from RM7.50) on lower ISGA valuation by 30%,” he added, noting the research firm will review its recommendation when situation in Turkey shows improvements.
Meanwhile, Wong said according to MAHB, both Atartuk and Sabiha Gokcen airports have resumed operations but with heightened securities.
However, he said some flights have been reported to have diverted from Istanbul, while some have been cancelled.
On a separate note, AmInvestment Bank maintained its “hold” call on MAHB, with an unchanged fair value of RM6.10 per share, based on a 25% discount to its SOP value of RM8.14 per share.