MAHB poised to gain as restrictions ease

By AFIQ AZIZ / Pic RAZAK GHAZALI

MALAYSIA Airports Holdings Bhd (MAHB) is expected to gain from the relaxation of the Movement Control Order (MCO) beginning this month, with the government slowly allowing interstate travel to take place, analysts said.

While the overall aviation sector is projected to recover earliest by 2025, analysts anticipate footfall at airports to gradually rise this year.

Former aviation regulator executive chairman Dr Nungsari Ahmad Radhi said the recovery of the aviation sector does not only depend on the lifting of movement restrictions, but how fast the industry can readjust its capacity to fill up demand.

“The extent of airport recovery is directly related to recovery in travelling and in airlines building back capacity.

“There is pent-up demand that can come back as restrictions are removed, but it will take a bit more time for demand to get back to pre-Covid levels. That depends on both demand recovery and supply readjusting its capacity,” he told The Malaysian Reserve when contacted yesterday.

CGS-CIMB Securities Sdn Bhd in a note recently maintained its ‘Add’ call on MAHB and increased its target price to RM6.79 from RM5.99 in view of the airport operator’s robust cashflow management.

CGS-CIMB said the airport operator’s core operational expenditures (opex) such as staff, utilities, maintenance and administrative costs were reduced by 26% in the financial year 2020. MAHB’s share price has risen nearly 10% or 54 sen since March 1. It closed at a year-high of RM6.55 yesterday, valuing the company at RM10.87 billion.

An industry analyst, who spoke on condition of anonymity, told TMR that while MAHB looks set to recover due to the MCO relaxation and reinstatement of interstate movements, visibility on the timeline still depends on the success of the vaccination programme.

He said the outlook for MAHB will still be challenging as its revenue could only slightly cover the opex cash burn if it relied solely on domestic travel.

“If domestic travel is the only driver, then there is not much MAHB could gain because the passenger service charge (PSC) for inter-national departure is higher compared to domestic fees,” the analyst said.

At present, the airport tax for domestic flights is set at only RM11, while for Asean and international destinations, the PSCs are at RM35 and RM50 respectively, except for Kuala Lumpur International Airport which charges a rate of RM73.

“Nonetheless, the share prices of most aviation-related counters are getting ahead of themselves as near-term visibility on fundamentals remains weak.

“First to recover would actually be local carriers that have a significant domestic market share, so in this case, it would be AirAsia Group Bhd,” he said.

All states in Malaysia are currently under the Recovery MCO (RMCO) phase after daily registered new Covid-19 cases has come under control. The National Covid-19 Immunisation Programme has also entered the third week with 166,000 people receiving the vaccine jab so far.

Travel for tourism has also been allowed under a targeted travel bubble scheme between RMCO states, Senior Minister (Security Cluster) Datuk Seri Ismail Sabri Yaakob announced on Tuesday.

However, the travel is still subject to strict conditions, he said, adding that those who wish to travel for tourism purposes can only do so via tour agency vehicles where the operator will have to seek police permission to make the journey.