Maybank IB remained bullish on Malaysia Airports Holdings Bhd’s (MAHB) as it expected a higher 4Q23 results as well as higher interests of foreign airlines to fly to Malaysia than before pre-Covid times.
“Moreover, passenger service charges (PSCs) in Malaysia will still be hiked by the historical 5-year cumulative CPI minus 0.1% on 11 February 2024 as stipulated under its current operating agreement (OA), with or without the new OA,” it said in its research note yesterday (Jan 21).
The research house retained its earnings estimates and roll forward our valuation base year to end-FY24E from end-FY23E and raise its DCF-TP to RM8.53 from RM7.96, which is an increase of 7%.
Historically, 4Q earnings tend to be weaker quarter-on-quarter (QoQ) due to back loading of expenses like staff costs and maintenance towards year end, Maybank IB said.
“For 4Q23, we understand that this may no longer be the case as MAHB has provisioned for staff bonuses throughout the year offsetting Istanbul Sabiha Gokcen’s potentially higher expenses QoQ on higher maintenance and security costs in tandem with higher pax traffic.
“We expect MAHB’s 4Q23 core net profit to come in at RM95 million to RM100 million (3Q23: RM80.3 million; 9M23: RM212.5 million).”
Maybank IB also noted encouraging inquiries for the airport operator from foreign airlines.
“Pax carried by foreign airlines into Malaysia have recovered to pre-Covid levels as at 3Q23. MAHB also stated that it has received inquiries for more airport slots from Chinese airlines since Malaysia waived visa requirements for Chinese visitors effective 1 Dec 2023,” it said.
It added major foreign airlines like Lufthansa, British Airway and Qantas, are due to return flying to Kuala Lumpur in the second half of 2024, and could contribute to higher PSC, as the charges on foreign pax traffic in Malaysia is 5 to 7 times that of the domestic one.
Additionally, Maybank IB said the PSCs will be hiked on Feb 11, with or without new OA.
“As at press time, The Malaysian Aviation Commission (Mavcom) has not released its third consultation paper that is supposed to guide MAHB’s new OA with the Malaysian government.
“Notwithstanding, MAHB stated that PSCs in Malaysia will still be hiked by the historical 5-year cumulative CPI minus 0.1% on 11 Feb 2024
as stipulated under its current OA.
“Our forecasts have imputed the new PSCs. If the new OA come into effect past 11 Feb 2024, the new aeronautical charges can be applied prospectively.
