CGS-CIMB downgrades MAHB to ‘hold’
Published on: Tuesday, October 19, 2021
By: Bernama
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Kuala Lumpur: CGS-CIMB Securities Sdn Bhd has downgraded its calls for Malaysia Airports Holdings Bhd (MAHB), Singapore Airlines (SIA) and Singapore Airport Terminal Services Limited (SATS) to “hold” from “add”, saying that their valuations are no longer attractive. 

It said the downgrade was driven by market optimism over rising global Covid-19 vaccination rates and the positive outlook for domestic and international air travel restoration in the next three to six months

“Investors’ optimism at the nascent resumption of domestic and international air travel has lifted share prices to levels we no longer consider attractive.

“We prefer airport plays as they offer direct exposure to higher pax traffic, while airlines may face competitive yield pressures and higher oil prices,” the brokerage said in a note Monday. 

CGS-CIMB broadly forecast that international pax traffic for Malaysia and Singapore aviation players would recover to between 40 per cent and 50 per cent of 2019’s pre-pandemic levels in 2022, and to between 70 per cent and 80 per cent in 2023. 

These forecasts, according to the brokerage, are based on its observations that major aviation markets in Northeast Asia, like China and Hong Kong, remain shut despite their high vaccination rates, while Malaysia and Singapore remain adverse to South Asian arrivals as they are perceived to be very high risk. 

In Southeast Asia, vaccination rates in Vietnam, the Philippines and Indonesia remain below 50 per cent of their respective populations, which might delay the full reopening of their aviation markets to sometime in 2022 forecast, said CGS-CIMB. 

Asia, as a whole, remains far behind the United States and Europe in the lifting of travel restrictions. 

“Based on this reality, upsides to our target prices for MAHB, SIA and SATS are now less than 10 per cent, placing them in the ‘hold’ range of our recommendation framework,” it added. 


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