18 May 2010

PP 7767/09/2010(025354)
Malaysia Corporate Highlights
RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

R e su l ts N o t e
18 May 2010
MARKET DATELINE

Malaysia Airports Share Price

Fair Value
:
:
RM4.98
RM5.45
1QFY10 Affected By FRS 139 Recom : Outperform
(Maintained)

Table 1 : Investment Statistics (MAHB; Code: 5014) Bloomberg: MAHB MK

Net
Net NTA/
FYE Turnover Profit EPS# Growth PER C.EPS* P/NTA ROE Gearing GDY share
Dec (RMm) (RMm) (sen) (%) (x) (sen) (x) (%) (X) (%) (RM)
2008 1,513.1 305.2 27.7 17.9 - 1.7 9.6 Net Cash 2.9 2.9
2009 1,636.8 377.2 34.4 23.8 14.5 - 1.6 10.9 0.1 3.4 3.2
2010f 1,697.6 375.0 34.1 -0.7 14.6 34.2 1.4 9.8 0.3 3.9 3.5
2011f 1,988.9 429.1 39.0 14.4 12.8 37.6 1.3 10.1 0.3 5.0 3.9
Main Market Listing /Trustee Stock/Non-Syariah Approved Stock By The SC * Consensus Based On IBES

RHBRI Vs. Consensus

♦ In line with expectation. Despite 1QFY12/10 net profit of RM72.6m Above
accounting for 19-20% of our full year forecast and the full year market In Line
Below
consensus, we consider the results within expectations as 4Q is seasonally
stronger on the back of school holidays. Issued Capital (m shares) 1,100.0
♦ YoY. 1QFY12/10 net profit declined by 26.6% from RM91.9m to RM72.6m Market Cap(RMm) 5,478.0
Daily Trading Vol (m shs) 0.5
mainly due to associate losses arising from the adoption of FRS 139, which
52wk Price Range (RM) 3.04 – 5.04
required MAHB to recognise concession payable by Sabiha Gokchen (SG) at
Major Shareholders: (%)
fair value, which in turn resulted in a RM19m loss. Khazanah Nasional 60.0
♦ QoQ. 1QFY12/10 net profit dropped by 48.2% from RM140.2m to RM72.6m
mainly due to: (1) Lower airport services and retail revenue (passenger
movements in 4Q is seasonally stronger on the back of school holidays); (2) FYE Dec FY10 FY11 FY12
Associate losses; and (3) Higher depreciation expenses. EPS Revision (%) +7.0 +7.6 -

♦ Good times ahead. Looking ahead, we remain positive on MAHB’s Var to Cons (%) -0.2 3.7 20.1

earnings outlook, underpinned by the booming air travel sector in the PE Band Chart
region (IATA projects a passenger volume growth of 7.3% in 2010) as well
as its continous efforts to expand its retail revenue (via the expansion of PER = 14x
retail and food and beverage space that will boost passenger spending in PER = 11x
PER = 8x
the airport).
♦ New LCCT project on track. MAHB reiterates that the new permanent low
cost carrier terminal (LCCT) project is on track to meet its completion
deadline of end-FY12/11.
♦ Earnings forecasts. Maintained.
Relative Performance To FBM KLCI
♦ Risks. These include: (1) Regulatory risks, particularly, inability to raise
airport charges; and (2) Traffic risk on economic downturn and outbreak of
pendamic deseases.
Malaysia Airports
♦ Investment case. Indicative fair value maintained at RM5.45 based on 16x
PER, in line with our 1-year target forward PER for the market. We continue
FBM KLCI
to like MAHB, as: (1) It is an excellent proxy to the booming air travel
sector in the region; (2) It allows investors to piggy-back on Air Asia’s air
passenger growth; and (3) The unabated political turmoil in Thailand that
made KLIA more attractive as the main hub for international airlines in the
Southeast Asia region. Maintain Outperform. Chye Wen Fei
(603) 92802172
chye.wen.fei@rhb.com.my
Please read important disclosures at the end of this report.

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Table 2: Earnings Review (YoY Cumulative)

FYE Dec 2009 2010 % YoY Observations/Comments
(RMm) 3M 3M Chg
Total revenue 392.2 436.4 10.1 Mainly due to higher airport services and retail revenue
- Airport services 284.4 308.4 8.4 Boosted by higher passenger movements of 21.0%
- Retail 80.3 100.1 24.7
- Project & repair and maintenance 3.4 3.3 -2.9
- Hotel 13.5 14.5 7.4 Increased occupancy
- Agriculture & horticulture 8.4 10.1 20.2 Increase in FFB price that more than offset lower production
- Others 2.1 0.0 NM
Operating profit 165.2 147.2 -3.2
Finance costs (0.0) (4.1) NM
Due to adoption of FRS139 whuch required MAHB to recognise
Associates 0.6 (24.0) NM concession payable by SG at fair value
Pretax profit 123.6 119.1 -3.8 Filtered down from operating profit
Tax expense (31.5) (46.5) 32.3 Due to higher effective tax rate of 33.2% vs. 25.5% in 1Q09
Minority interest (0.1) (0.1) NM
Discontinued operations (0.0) (0.0) NM
Net profit 91.9 72.6 -26.6 Hurt by: (1) Associate losses; and (2) Higher tax expense
EPS (sen) 8.4 6.6 -27.3

Operating margin (%) 31.4 27.3 -4.1 pt

Pretax margin (%) 31.5 32.1 0.6 pt
Net profit margin (%) 23.4 16.6 -6.8 pts
Effective tax rate (%) 25.5 33.2 7.7 pts

Table 3: Earnings Review (QoQ)

FYE Dec 2009 2010 % QoQ Observations/Comments
(RMm) 4Q 1Q Chg
Total revenue 476.6 436.4 -8.4 Mainly due to lower airport services and retail revenue
- Airport services 325.2 308.4 -5.2 Passenger movement declined by 7.2% qoq
- Retail 104.1 100.1 -3.8
- Project & repair and maintenance 19.1 3.3 -82.7
- Hotel 15.8 14.5 -8.2
- Agriculture & horticulture 12.3 10.1 -17.9

- Others 0.0 0.0 NM

Operating profit 161.4 119.1 -26.2
Finance costs -6.2 (4.1) -33.9
Associates 2.4 (24.0) NM
Pretax profit 157.6 119.1 -24.4 Arising from adoption of FRS 139
Tax expense -17.0 (46.5) 173.5
Minority interest -0.4 (0.1) NM
Discontinued operations 0.1 - NM
Net profit 140.2 72.6 -48.2
EPS (sen) 12.7 6.6 -48.0

Operating margin (%) 33.9 27.3 -6.6 pts

Pretax margin (%) 33.1 32.1 -1.0 pts
Net profit margin (%) 29.4 16.6 -12.8pts
Effective tax rate (%) 10.8 33.2 22.4pts

Table 4: Earnings Forecasts Table 5: Forecast Assumptions

FYE Dec (RMm) FY09a FY10f FY11f FY12f FYE Dec FY10f FY11f FY12f

Turnover 1636.8 1,697.6 1,988.9 2,392.7 Total passenger movements (m) 52,329.1 63,336.0 78,445.8
Turnover growth (%) 8.2 3.7 17.2 20.3

EBITDA 602.9 707.5 795.0 943.2 PSC ex-KLIA 51 51 51

EBITDA margin (%) 3.2 17.4 12.4 18.6 - International (RM) 9 9 9
- Domestic (RM)
Dep. & amort. -113.0 -209.1 -224.4 -254.5
PSC at LCCT 25 25 25
EBIT 489.9 498.5 570.6 688.7 - International (RM) 6 6 6
EBIT margin (%) 29.9 29.4 28.7 28.8 - Domestic (RM)
Net interest expense -14.2 -42.1 -43.9 -99.6 Source: Company data, RHBRI estimates
Associates 2.6 2.4 2.4 0.0
Pretax Profit 478.3 500.9 573.0 688.7
Tax -100.5 -125.2 -143.3 -172.2
Minorities -0.7 -0.6 -0.6 0.0
377.2 375.0 429.1 516.5
Net Profit
Source: Company data, RHBRI estimates

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IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank Berhad
(previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable law. The opinions
and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or be contrary to
opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be construed as an offer,
invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any manner whatsoever and no
reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons may from time to time have an
interest in the securities mentioned by this report.

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persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate particular
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This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
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The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based upon
various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more over
a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

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subject to the duties of confidentiality, will be made available upon request.

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actions of third parties in this respect.

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