MAHB to see growth after travel restrictions eased

For the first quarter (1Q21), Malaysia’s total passenger movements declined 91% to 1.7 million mainly due to border closures and movement control orders

KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) is forecast to see stronger financial performance in the fourth quarter of 2021, as interstate travel restrictions are expected to be lifted by then, according to TA Securities Research.

For the first quarter (1Q21), Malaysia’s total passenger movements declined 91% to 1.7 million mainly due to border closures and movement control orders.

However, TA Securities Research said this was in line with its full-year growth forecast of 27.5% as growth is expected to normalise from April 2021 onwards after 12 months of border closures.

In March 2021, total passenger movements in Malaysia contracted by 82.1% year-on-year to 579,000 led by weakness in both international and domestic sectors which declined by 91.9% and 75.9% respectively.

The research unit said the weak performance was not unexpected as interstate travel restrictions in major states were still intact and borders were remained closed. In March 2021, overall aircraft movement declined by 63.2%.

As a continuous effort to raise safety standards in curbing the Covid-19 pandemic, six airports (namely Kuala Lumpur International Airport or KLIA, Penang, Kota Kinabalu, Kuching, Langkawi and Subang Airport) are currently undergoing the Airport Health Accreditation (AHA) programme by the Airport Council International (ACI).

Istanbul Sabiha Gokcen International Airport (SGIA) meanwhile, has already received the accreditation recently.

The AHA is awarded based on health measures and procedures by the airports that are aligned with the industry’s best practices in particular with International Civil Aviation Organisation’s Restart Task Force guidelines.

KLIA has also started disinfecting arriving baggage with the newly installed automatic ultraviolet disinfection system.

This is one of the latest Airports 4.0 initiative expedited to ensure that airport safety remains at the highest level.

Meanwhile, Istanbul SGIA recorded its first year-on-year growth in passenger movements (7.4% increase) after 12 consecutive months of contractions, led by 11.4% growth in domestic sector, which offset a 1.9% decrease in the international sector.

However, the monthly passenger movements of 1.6 million in March 2021 were considerably low if compared to pre-Covid levels of 2.8 million in Mar 2019 due to slow passenger movements in the international sector.

The year-on-year improvement in the domestic sector in March 2021 was due to curfew relaxation in Turkey.

TA Securities Research maintained its “buy” call on MAHB and discounted cash flow (DCF) valuation at RM7.40 per share, based on unchanged discount rate of 11.4%.