RHB Research has maintained its buy call on Malaysia Airports Holdings Bhd (MAHB) with an unchanged target price of RM9.25.
Its analyst Alan Lim believes that any further uncertainty as to the Regulatory Asset Base (RAB) has already been priced in for the airport operator.
This follows the announcement from the Ministry of Transport that the Malaysia Aviation Commission (MAVCOM) will be dissolved, with its functions integrated into the Civil Aviation Authority of Malaysia (CAAM).
The RAB, under the purview of MAVCOM, was supposed to be tabled next month, and involved a plan to sustainably fund airport developments in the country. However, uncertainties about whether or not the RAB will come to fruition loom as the dissolution of MAVCOM was announced.
The move to merge MAVCOM into CAAM, the latter of which saw its chief executive officer resign recently due to the downgrade of Malaysia’s air safety rating, is believed to optimise resources for higher efficiency.
“We gather that the initiative to rationalise the two authorities is being done to optimise financial and human resources. The Ministry of Transport also believes it can increase administrative efficiency and service quality by doing this,” said Lim.
The rationalisation exercise will involve amending the MAVCOM Act to allow for the dissolution of the authority, while also amending the CAAM Act to lay out the new roles for CAAM.
“Given that the RAB framework was set up by MAVCOM, we believe RAB’s feasibility will be reviewed by looking into other models as well. In the near term, we believe the current Operating Agreement will likely be used for the next six to 12 months, pending a new model for the aviation industry,” noted Lim.
As of the noon close, MAHB’s shares were traded at RM7.66, down 23 sen, with 1.51 million shares changing hands.
