Muted impact from lawsuit against MAHB

PETALING JAYA: MIDF Research believes the impact of the lawsuit filed by a contractor against Malaysia Airports Holdings Bhd (MAHB) will be muted considering that provisions of over RM40 million have been made for it.
“Assuming that the judgement goes against MAHB, the impact will be circa 19% of MAHB’s earnings given that the amount claimed is RM44 million,” said the research house in a report today.
Recall that Syarikat Pembinaan Anggerik Sdn Bhd (SPASB) filed a RM43.99 million lawsuit against MAHB in April 2017 due to alleged losses and damages in relation to construction work for the upgrade of the Penang International Airport.
Further proceedings were halted due to a stay of application granted to MAHB with respect to SPASB’s claims.
However, it was determined that SPASB was right in commencing legal action, hence allowing the proceedings to continue.
MIDF Research is maintaining its earnings projection for MAHB at current juncture.
On the prospects for MAHB, MIDF Research believes it is riding on a positive trajectory, based on its cumulative passenger traffic data.
“The trend in passenger traffic is expected to be robust due to seasonality factors and is expected to continue at a positive momentum at least in the short- to medium-term period.”
The research house said the growth will be driven by capacity expansion of airlines at MAHB airports as well as encouraging expectation of macroeconomic performance throughout the year.
Given the optimism on MAHB due to exposure from robust travel and tourism demand, MIDF Research has maintained a “buy” call on MAHB with a target price of RM9.80.
“MAHB is poised to benefit in the long run based on the healthy trend of passenger traffic and improving airport operational efficiency in MAHB airports.”
Its share price closed seven sen lower at RM8.97 on some 3.1 million shares done.