Airport- under a dark cloud

Lately, Malaysia Airport Holdings Bhd ('Airport') has been in the news for not the best of reasons. It is in a horrible spat with Airasia over the hike in airport tax which has since escalated to the construction of the new LCCT, known as KLIA2. Airasia has a litany of complain which ranges from the overall cost of construction to the size of the new LCCT, and from the late completion to the necessity of having aerobridges.

Malaysians who follow this saga are equally divided on this rather emotional issue. Most Malaysians are very proud of Airasia because it is one of the rare Malaysian brand that is internationally recognized. It is a great success story that is in the same league as Virgin Atlantic. We cheer Tony Fernandes for his Airasia success & his other endeavors, such as his purchase of a EPL football team & his involvement in Formula 1. However, I have to say that I am a bit troubled by his aggressive attack on Airport. While a confrontational approach is 'refreshing', I feel that a calmer approach could have been more effective. Being a media-savvy businessman, Tony's behavior is hard to comprehend. How I wish the Tenaga's Chairman would come out fighting against the IPPs like Tony. But, then I am digressing...

Technically speaking, Airport appears to have made a top. From the weekly chart (Chart 1) below, we can see the bearish divergence between the MACD & RSI indicators on the one hand and the price chart on the other hand, over the past two years. Finally, Airport succumbed to selling pressure in late September & the stock broke the 200-day SMA line & hit a low of RM4.50. From there, the stock staged a strong recovery to go above its 200-day SMA line in late October. However, Airport came under selling pressure again in November, courtesy of all the negative publicity surrounding the KLIA2 project.


Chart 1: Airport's weekly chart as at Dec 5, 2011 (Source: Tradesignum)

From the monthly chart (Chart 2), we can see that the sharp drop in Airport's share price in September & October has caused the MACD indicator to hook down. The monthly RSI has dropped to the 50 mark before rebounding. ADX has similarly hooked down (with -DMI nearly cutting above the +DMI). All in all, the technical outlook for Airport has turned bearish. I would not be surprised to see Airport retesting its recent low of RM4.50 again in the next few months. Based on this, I think it is appropriate to take some profit on this stock.


Chart 2: Airport's monthly chart as at Dec 1, 2011 (Source: Tradesignum)

Note: As at 4.25pm, Airport was trading at RM5.80- a loss of RM0.24.