Better prospects ahead for MAHB

Strong momentum in traffic flow from the international segment is expected to continue


MALAYSIA Airports Holdings Bhd (MAHB) can expect better prospects as a result of the continued momentum seen in the movement of Asian travellers along with some possible policy revisions.

MIDF Amanah Investment Bank Bhd said strong momentum in traffic flow, which will be led by the international segment, is expected to continue.

“We premised our expectations on the robust air travel demand, while the Chinese tourists are still expected to be the driver, due to supportive visa policies in Malaysia,” it said in a research report yesterday.

MIDF added that Chinese travellers accounted for 10% of Asian tourists in 2017, of which the number of passengers has grown 10.8% annually at a three-year compound annual growth rate.

“While we note this positive development, we believe the positives have already been priced in,” it said.

As such, MIDF maintains its ‘Neutral’ stance on MAHB with an unchanged target price (TP) of RM9.88, as the airport operator’s performance is expected to match MIDF’s projection for the remaining of the year.

Meanwhile, Kenanga Investment Bank Bhd said the review on the passenger services charges (PSC) by Malaysian Aviation Commission (Mavcom) could also be favourable to the airport operator’s prospects.

“We are anticipating that the study on new PSC by Mavocm could be favourable, or detrimental to MAHB’s prospects.

“In the near term, we believe the management is working relentlessly to meet Mavcom’s quality of service framework, which is to be rolled out in stages,” Kenanga stated in its research note.

MAHB had set aside RM600 million to RM700 million of capital expenditure (capex), which is to be utilised in two to three years to upgrade its infrastructure.

Kenanga maintains its TP of RM8.60 for MAHB based on an unchanged price-to-book value of 1.72 times.

“While we believe there is great potential at MAHB, we do not see any near-term catalyst, pending clarity and direction from Mavcom on the ongoing

developments, such as the new PSC and regulatory asset base framework model, which could potentially prompt us to upgrade our valuation and recommendation,” it said.

In a separate statement, MAHB said its passenger movements grew 2.9% year-onyear (YoY) in August 2018 to 11.8 million for its local and international airports backed by the seasonal holiday and pilgrimage travels.

The airport operator added that its total network of airports registered 5% growth with 132 million passengers in the last 12 months, which was the highest traffic handled by MAHB.

“The peak traffic in August was partly due to the summer holidays in Turkey and the haj travel season,” the statement read.

MAHB’s international passenger traffic rose 3.2% YoY to 5.6 million from 5.4 million last year, while its domestic traffic improved 2.7% recording 6.1 million passengers.

Its aircraft movement globally increased by 1.1% with the international sector rising 3.3% to 37,791 and the domestic declining 0.4% to 56,262 from 56,489 last year.

On the local front, Malaysian airports’ passengers recorded a minimal increase of 0.9% YoY to 8.5 million.

“In comparison, August 2017 had the benefit of the SouthEast Asian Games Kuala Lumpur from Aug 19 to 30, which also coincided with the school holidays.

“Also, there was an increase in passenger movements for South-East Asia, North-East Asia and the Africa region in August 2018,” it said.

MAHB said its international passengers for local airports rose 1% to 4.4 million and the domestic sector grew 0.8% to four million passengers.

It added that the Aseanbound international passenger traffic grew 2.1% to 2.2 million, while the non-Asean traffic fell 0.04% to 2.3 million passengers.

MAHB’s overall aircraft movements for local airports declined 0.4%, while its international aircraft movements grew 2% and the domestic declined 1.9%.

Its overall average load factor recorded 75.1% in August, 1.4 percentage points lower than August 2017.

Kuala Lumpur International Airport (KLIA) also recorded a 0.2% growth with 5.1 million passenger movements.

A total of 1.7 million passenger movements were recorded for the Asean-bound destinations, 0.8% lower than August 2017 while 1.9 million passengers were recorded for the non-Asean destinations, a 1.1% decline against August 2017.

KLIA’s domestic passengers grew 1.6% to 1.4 million, while traffic at its main terminal rose 0.1% and KLIA2 declined 0.6%.

MAHB said the overall aircraft movements at KLIA rose 0.4% YoY compared to last year.

KLIA’s international aircraft movements fell 1.3%, while domestic rose 4.4%.

On the global front, MAHB’s Sabiha Gokcen International Airport in Istanbul posted an 8.5% growth for its passenger traffic in August with 3.3 million passengers.

Its international passengers rose 12% to 1.2 million, while the domestic sector rose 6.6% to 2.1 million passengers.

Total aircraft movements increased by 6.3%, with both international and domestic aircraft movements rising 8.4% and 5% respectively.