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Nikkei Markets

Malaysia Airports' 3Q net profit more-than-doubles

Company guides for better performance on year helped by modest traffic growth

Malaysia Airports is targeting earnings before interest, tax, depreciation and amortization of 2.09 billion ringgit this year.   © Reuters

KUALA LUMPUR (Nikkei Markets) -- Malaysia Airports Holdings, which operates the Kuala Lumpur International Airport, more than doubled its third-quarter net profit thanks to write-back in provision for debts and decline in other costs.

Net profit for the three months ended Sep. 30 totalled 168.49 million ringgit ($40.14 million) compared with 80.93 million ringgit over the same period last year, Malaysia Airports said in an exchange filing. Quarterly revenue edged 1.7% higher year-on-year to 1.23 billion ringgit from 1.21 billion ringgit.

"The management expects the financial performance for the financial year 2018 to be better than the previous year," Malaysia Airports said. The company noted Malaysian operation is expected to record "relatively modest" passenger traffic growth, while growth in Turkey will likely be sustained.

Analysts said Malaysia Airports' latest earnings slightly exceeded market expectations and the company may top its own targets as earnings will likely pick up in the fourth quarter during the peak travel season.

Malaysia Airports is targeting earnings before interest, tax, depreciation and amortization of 2.09 billion ringgit this year. Domestic operation is expected to account for nearly 60% of the operating profit generated this year.

Apart from the Southeast Asian nation's main gateway, Malaysia Airports also runs the adjacent klia2, base of the region's largest budget airline by fleet, AirAsia, and over three dozen smaller airports in the country.

For its first nine months, net profit jumped three times to 699.21 million ringgit from 207.47 million ringgit over the same period last year. EBITDA surged 33% to 1.96 billion year-to-date. Nine-month revenue rose 3.7% year-on-year to 3.60 billion ringgit.

The company booked unrealized gain on fair value of investment in GMR Hyderabad International Airport and gain on disposal of GMR Male International Airport amounting to 258.4 million ringgit and 28.2 million ringgit respectively.

Malaysia Airports flagged some short-term impact due to higher oil prices, though it is unlikely to hamper traffic growth in the long run "based on past trends." Still, passenger growth of its Malaysian operation remains vulnerable to macroeconomic pressures, the company cautioned.

During the period, international traffic increased 5.8% to 38.6 million passengers, while domestic tariff declined 0.8% to 35.1 million passengers. The company predicts that international passenger traffic growth will likely outpace domestic passenger traffic this year.

"The growth momentum in Turkey is expected to hold based on current market conditions," Malaysia Airports added. Total passengers at the company's Istanbul Sabiha Gokcen International Airport rose 11% to 25.9 million passengers during the period.

"Operation looks positive, incentives to boost tourism will likely provide some buffer for passenger growth moving forward," said MIDF Amanah Investment Bank Analyst Adam Mohamed Rahim.

Shares of Malaysia Airports fell 2.3% to 7.80 ringgit on Wednesday amid broader market weakness. The benchmark FTSE Bursa Malaysia KLCI was down nearly 1%.

--Alexander Winifred

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