PETALING JAYA: Malaysian Airports Holdings Bhd (MAHB) continues to see a slump in passenger traffic as there are still barriers to travel, given the ongoing pandemic.
RHB Research said its share price movement indicates that the market has already looked beyond this existing pandemic or the interstate travel restrictions.
Since the implementation of the first movement control order in the country on March 18 last year, MAHB’s share price has recovered by 41.8%, it said.
However, on a cumulative basis, the dismal performance in February dragged the two-month 2021 contraction in passenger movement to 92.9% from 91.6% a month ago.
The overall aircraft movements decreased by 83.2%.
The domestic average load factor registered at 62.2%.
The international average load factor, meanwhile, remained flat with the restricted movements and traveling procedures.
This was despite the Lunar Chinese New Year celebrations in February, which typically is a busy month for most airports.
There is no change to its earnings projections.
However, it said “we reiterate a ‘buy’ recommendation on MAHB as one of our vaccine plays for 2021, ’’ the research house said
That is based on MAHB’s discounted cash flow valuation at RM7.40 per share, based on an unchanged discount rate of 11.4%.
The research house said it was also positive on the RM3.6bil cash injection by Khazanah Nasional Bhd into Malaysia Airlines, as the latter’s survival is crucial to MAHB as one of its key customers.
Likewise, the proposed placement of 668 million new shares by AirAsia Group Bhd or 20% of the group’s total shares is a big step forward to revive its balance sheet and ensure business continuity.
Singapore and Australia are discussing an air travel bubble that would allow travel between the two countries without the need for a quarantine.
This is possible because both countries brought Covid-19 under control and that has paved the way for the border reopening. Malaysia cannot do that for now as its numbers are still above the 1,000 level.
The research house said the numbers should fall by May and it was optimistic that the travel bubble between Malaysia and regional countries could begin in the third quarter of 2021.
However, it added that there would be another issue if a vaccine passport is needed for travel, which is still unclear at the moment.