MAHB registers 12.0% net growth on the back of 36.8% growth in revenue in 1H2013

23-Jul-2013

Malaysia Airports Holdings Berhad ("MAHB") recorded a revenue of RM2,005.4 millionfor the six months ended 30 June 2013 ("1H13"), representing a growth of 36.8% compared to RM1,465.5 million in the corresponding period in 2012 ("1H12"). Earnings before interest, tax, depreciation and amortisation ("EBITDA") grew 8.2% to RM452.6 million, from RM418.5 million in 1H12. Profit after tax ("PAT") grew 12.0% to RM227.8 million in 1H13, compared to RM203.4 million recorded in 1H12.

In line with the adoption of IC Interpretation 12: Service Concession Arrangements ("IC 12") effective 1 January 2012, MAHB recognises the construction revenue and costs in accordance with FRS 111: Construction Contracts by reference to the stage of completion of the construction works of klia2 and Penang International Airport, which are construction works on public sector infrastructure assets and services currently being undertaken by MAHB.In 1H13, MAHB recognised the construction revenue and costs in relation to the aforesaid projects amounting to RM841.4 million and RM804.9 million respectively.

Excluding the effects of IC 12, revenue for 1H13 was RM1,164.0 million, which was 12.4% higher than the RM1,035.6 million registered in 1H12. PAT for 1H13 was RM191.3 million, which was 4.3% higher than the RM183.4 million registered in 1H12.

The increase in operating revenue was attributed to stronger results from the airport operations segment, driven by strong air travel demand especially in the Asia Pacific region. MAHBrecorded passenger growth of 13.6% in 1H13, outpacing the expected passenger growth rate of 7.1% for 2013, with a totalof 37.0 million passengers having passed through MAHB's 39 airports in Malaysia. Both international and domestic passenger movements recorded strong growth at 14.4% and 12.8% respectively. The total passenger movements in KLIA increased by 15.5%, whereby both KLIA-MTB & LCCT recorded positive growth of 19.7% and 11.2% respectively. All other airports recorded an aggregate growth in total passenger movements of 10.8%.

Total aircraft movements grew 10.4% to 350,532 aircrafts, with the international sector recording a higher growth of 11.8% compared to the domestic sector, which recorded a 9.5% growth.

The revenue generated by airport operations segment improved by 13.5% to RM1,102.2 million, mainly driven by aeronautical revenue which had improved by 17.7% on the back of strong increase in passenger and aircraft numbers. The increase in revenue was also attributed to the implementation of the new landing and parking charges with the increase of 9% and 18% respectively (compounded annually effective 1 January 2012, 1 January 2013 and 1 January 2014).

The PAT growth was however dampened by higher total costs mainly attributed by higher user fee, staff costs, repair and maintenance costs as well as utilities costs. Previously, the amount of user fee that has been recognised in the income statement represents half of the total user fee payable to the Government of Malaysia, while the other half is to reduce the amount due for the Balance Residual Payment arising from MAHB's restructuring exercise which was completed in February 2009. Upon the full settlement of the Balance Residual Payment in April 2013, the user fee is now fully recognised in the income statement.

Thenon-aeronautical revenue recorded a growth of 9.3% to RM523.6 million on the back of improved performance in the retail and rental businesses. MAHB's own retail business grew 9.7%, driven by increase in passenger volume and higher retail spending by passengers. Revenue from rental of space, advertising and other commercial segments grew 8.8% to RM240.3 million, contributed mainly by higher rental royalty resulting from the higher sales at KLIA and increased car park revenue due to higher number of air passengers and airport visitors.

The non-airport operations segment recorded revenue of RM61.8 million in 1H13, representing a decrease of 4.3% from RM64.6 million recorded in 1H12mainly due to lower revenue recorded in agriculture and horticulture segment as well as the hotel segment. The agriculture and horticulture segment registered lower revenue of RM11.8 million in 1H13which was 45.3% lower than the RM21.5 million registered in 1H12due to lower price attained for fresh fruit bunches coupled with a lower production volume for the period (2013: RM464/25,612MT vs. 2012: RM639/39,097MT). Similarly, the hotel segment revenue dropped by 17.7% to RM32.3 million, mainly due to the lower occupancy rate (2013: 61%, 2012: 65%) pursuant to the rooms renovation exercise which had been completed on 4 April 2013. However, the decline was offset by contribution from the project, repair and maintenance segment which recorded a higher revenue of RM17.7 million in 1H13.

With regards to the construction of klia2, it was announced on 18 June 2013, that UEMC-Bina Puri JV, the contractors for the terminal building have confirmed that the completion date will be 30 April 2014 inclusive of securing the Certificate of Completion and Compliance ("CCC") and Operational Readiness & Airport Transfer ("ORAT") as per the contractual obligations. Based on the revised completion date by the contractors, MAHB is targeting to open klia2 for operations on 2 May 2014.

MAHB continues to benefit from the entry of new airlines and expansion of local carriers in 1H13, Malaysia Airlines and AirAsia Group contributed strongly to passenger growth while Malindo Air has registered a competitive load factor. Malaysia Airlines' entry as a full member of oneworld in February 2013 has significantly increased the market outreach across continents and will continue to provide critical support for passenger growth. Furthermore, the additional seat capacity offered by various airlines and the Visit Malaysia Year 2014 campaign launched early this year will further support the growth trend.

Notwithstanding the recent downward revision in 2013 global GDP forecast by International Monetary Fund, we remain optimistic with our 2013 forecast. This is evidenced by our stable past performance, whereby we have been able to sustain a growth of 5%-7% even during relatively poor economic conditions in the past. MAHB through its marketing efforts have been aggressively pursuing airlines globally through its various marketing initiatives. The recent entry of foreign carriers like Air France, Philippine Airlines, Turkish Airlines, Zest Airways and Thai Smile bode well for MAHB's passenger growth in 2H13, hence MAHB is optimistic to achieve its Headline KPIs in 2013.