PETALING JAYA: Malaysia Airports Holdings Bhd’s (MAHB) new terms for the operating agreements (OA) mildly lighten its capital expenditure burden but have no material impact on its earnings, said Kenanga Research.
Recently, the airport operator signed new operating and land lease agreements with the government to extend its concession to manage 39 airports in the country for 45 years until Feb 11, 2069.
In addition, Kenanga has maintained a ‘market perform’ call on MAHB following the new tariff revision while indicating that MAHB is a good proxy for the recovery of air travel and tourism locally, regionally, and globally.
“The recently announced tariff revision is positive to its earnings but may not be sufficient for it to fund more aggressive capex plans,” it said in a note today while maintaining the target price (TP) for MAHB’s shares at RM9 per unit.
Meanwhile, the research firm expects business and leisure air travel to continue to recover throughout the financial year 2024 (FY 2024).
According to its in-house projection, tourist arrivals in Malaysia are expected to jump 35% to 27 million this year, consistent with Tourism Malaysia’s projection to return to pre-pandemic levels in FY2024 from an estimated 20 million a year ago.
The growth will be driven by Chinese tourists who have historically contributed to an estimated 12% of total tourist arrivals in Malaysia.
Furthermore, tourist arrivals are expected to be boosted by the 30-day visa-free regime for Chinese and Indian visitors to Malaysia starting from December 2023, allowing inbound visitors 15 visa-free days between Dec 1, 2023, and Nov 30, 2024.
This, it said, should underpin growth in airport passengers’ throughput demand in 2024.
“We expect traffic trajectory to grow in subsequent months as airlines continue to redeploy more aircraft to match increasing demand, amplified by aircraft movements that are pointing towards increased medium and long-haul flights to Perth, Sydney and Auckland, as well as Southeast Asia and South Asia destinations,” it said.
The research house noted that the risks to its call included endemic and pandemic occurrences deterring air travel; unfavourable terms for airport operations; and risks associated with overseas operations.
As at 12.29pm, MAHB’s share price was up by 1.8 sen or 0.2% at RM9.14, giving it a market capitalisation of RM15.25 billion.
