Airport to maintain its steady growth

Airport has just announced its results for 1Q2009 ended 31/3/2009. Compared to the previous corresponding quarter (1Q2008), net profit was unchanged while turnover has increased by 4.2%. However, the net profit increased by 61% q-o-q to RM91.9 million on a 7.7%-increase in turnover to RM392 million. The increased turnover was attributable to growth in aeronautical revenue of 19.2% & non-aeronautical revenue of 14.7%. The increased profits was attributable mainly to reversal of provision for lease rental.



The steady rise in Airport's turnover & profits over the past 12 quarters can be clearly seen in the chart below.


Chart 1: Airport's past 12-quarters' turnover & profits

I believe 2009 will be a real test on whether Airport can maintain its steady growth. Can Airport build on the strong growth in the non-aeronautical revenue achieved in 1Q2009 as a result of the implementation of a retail optimization plan and provision of more commercial spaces? Similarly, can it maintain the healthy growth aeronautical revenue achieved in 1Q2009, given that passenger movement for 2009 is expected to be sluggish due to the economic slowdown?

In term of valuation, Airport (closed at RM3.48 in the morning session) is now trading at a trailing PE of 12.4 times (based on the last 4 quarters' EPS of 28 sen). At this multiple, Airport is still deemed fairly attractive for the defensive stock.

From the two charts below, we can see that Airport has been rising steadily since the successful financial restructuring was completed in February this year (go here). It has nearly tested its November 2007 of RM3.62 yesterday & today (with high recorded of RM3.60). The all-time high for Airport was RM4.00 recorded on February 9, 2000. The inability to surpass the November 2007 of RM3.62 could result in profit-taking, with the possibility of the share price drifting lower to test the horizontal support of RM3.20 or the medium-term uptrend line support of RM3.00.


Chart 2: Airport's daily chart as at 28/5/2009 (Source: Quickcharts)


Chart 3: Airport's weekly chart as at 28/5/2009 (Source: Quickcharts)

Based on good financial performance & reasonably attractive valuation, Airport could still be a good stock for long-term investing. However, I believe that the stock could see some correction as a result of profit-taking activity after its recent sharp rise. A good entry level would be about RM3.00-3.20.