KUALA LUMPUR (May 5): Malaysia Airports Holdings Bhd (MAHB) saw its net profit plunge 74.69% to RM32.58 million or 1.28 sen a share for the first financial quarter ended March 31, 2015 (1QFY15) from RM128.71 million or 10.19 sen a share a year ago, mainly dragged by finance cost.

In a filing with Bursa Malaysia today, MAHB (fundamental: 1.15; valuation: 1.4) said its finance cost surged over 22 times to RM159.91 million compared with RM7.26 million in 1QFY14.

Finance cost arose from interest expenses for loans taken to support the airport operator's working capital including airport services, project and repair, and maintenance activities.

Revenue for 1QFY15, however, rose 12.18% to RM876.18 million from RM781.08 million a year ago, driven by its non-aeronautical business, which includes lease of commercial spaces (rental), management and operations of airport parking facilities, advertising business, the airside transit hotel and the Sama-Sama hotel operations.

“Non-aeronautical revenue increased by 39.7% to RM399.6 million in 1QFY15 from RM286.1 million a year ago, when including non-aeronautical revenue from ISG (Istanbul Sabiha Gökçen International Airport) and LGM (LGM Havalimani Isletmeleri Ticaret ve Turizm AS) totalling RM89.9 million,” the group said.

MAHB also noted that passenger movements for its airports fell by 1.5% to 20.3 million passengers in 1QFY15, from 20.6 million passengers previously.

Moving forward, the group believes that its 2015 passenger traffic target of 85.8 million passenger movements for Malaysia to be within “achievable range”.

“Passenger traffic for March, the third highest month movement since January 2014, provides optimism for the next quarter and beyond. The return of British Airways in May and All Nippon Airways in September will provide the added dynamism required by the industry,” MAHB said.

The stock rose 37 sen or 5.74% to RM6.82 per share today, with 1.15 million shares done, giving it a market capitalisation of RM10.65 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)