Kenanga Research expects business and leisure air travel to continue to recover throughout the year with activity poised to return to pre-pandemic levels in 2024.
PETALING JAYA: Malaysia Airports Holdings Bhd
(MAHB) expects better future quarterly earnings as its partner airlines rebuild their fleet, according to Maybank Investment Bank (Maybank IB) Research.
So far, MAHB has guided airlines to reinstate capacities over 80% of pre-pandemic in Malaysia and above 120% in Istanbul Sabiha Gokcen International Airport (ISGA) by the second half of 2023 (2H23).
The research firm noted that as of mid-May 2023, the Malaysian seat capacity has recovered to 85% of financial year 2019 (FY19) levels.
According to Maybank IB, its FY23 earnings forecast is based on Malaysian passenger traffic recovering to 77% of FY19 levels, while FY24 earnings forecast is based on Malaysian passenger traffic recovering to 92% of FY19 levels.
Meanwhile, analysts await a clearer picture on MAHB’s earnings prospects from the operating agreements with the government, which will be concluded and enforced in the second half of 2023.
Industry regulator, Mavcom will also finalise the gazetted passenger service charge rates for the first regulatory period (2024 to 2026) in the third consultation paper to be published in third-quarter 2023 (3Q23).
Kenanga Research expects business and leisure air travel to continue to recover throughout the year with activity poised to return to pre-pandemic levels in 2024.
“According to Tourism Malaysia, tourist arrival in Malaysia is expected to jump 60% to 16 million in 2023 from an estimated 10 million a year ago. A key driver is Chinese tourists that historically contributed to an estimated 12% of total tourist arrivals in Malaysia.
“In 2024, we project tourist arrivals to jump further by 24% to 20 million, compared to the pre-pandemic level of 26 million,” said the research firm in a report.
The research firm said MAHB’s net profit of RM58.19mil for 1Q23 came in within expectations.
Year-on-year, 1Q23 revenue rose 81% in tandem with an 82% increase in passenger throughput to 26.8 million, it added.
Among the key takeaways following a briefing with analysts, Kenanga Research said the group reiterated that passenger’s throughput recovery is gaining traction in both Malaysia and Türkiye. The airport operators also believes its international sector has much more to gain from China’s reopening.
It also plans to build a sustainable recurring income via the KLIA Aeropolis land targeting global logistics, aerospace and industrial players.
Currently, key tenants in KLIA Aeropolis are established global logistics and aviation players including Cainiao Aeropolise WTP Hub and DHL Express.
“Recall, MAHB was recently granted a 99-year development agreement from the Malaysian government to plan, design, develop and construct the KLIA Aeropolis land measuring 3,454.92 ha.
“A few parties have shown their interest; however, negotiations are still at the preliminary stage,” said Kenanga Research.
