PETALING JAYA: Malaysia Airports Holdings Bhd
(MAHB) is expected to see positive impacts from the improvement in the tourism sector including growth in passenger movements.
According to Kenanga Research, the airport operator is expected to see continued recovery in business and leisure air travel throughout this year.
Citing Tourism Malaysia, it said tourist arrivals are expected to jump 60% to 16 million this year from an estimated 10 million in 2022.
The research house expects tourism activity to return to the levels seen before the Covid-19 pandemic by 2024. Tourist arrivals would likely expand further by 24% to 20 million in 2024 compared with the pre-pandemic level of 26 million annually. “This should underpin growth in MAHB’s passenger throughput demand in 2023. We expect traffic trajectory to grow in subsequent months as airlines continue to reactivate more aircraft to match increasing demand,” it said in a report.
Similarly, RHB Research expects a stronger recovery in the tourism industry in the second half of this year.
“We like MAHB for the salient recovery of international tourism expected in 2H23, driven by a gradual recovery of tourist arrivals from China and resumption of airline capacity,” it said.
The increase in the number of medium and long-haul flights to Perth, Sydney and Auckland, South-East Asia and South Asia destinations would amplify the growth trajectory.
On the flip side, Kenanga Research noted the proposal by the Malaysian Aviation Commission (Mavcom) to raise airport tariffs based on the consumer price index (CPI) with effect from regulatory period 1 (RP1) covering the 2024 to 2026 period would limit MAHB’s earnings upside for the medium term.
“The recent proposal to peg airport tariffs to the CPI (despite operating cost rising at a much faster pace) could work against MAHB’s ability to generate enough cash flow for capital expenditure purposes, particularly for airport expansion and maintenance,” it explained.
“While Mavcom also proposes a mechanism for MAHB to recoup losses incurred during RP1 in RP2, we are concerned over MAHB’s cash flow over the RP1 duration,” Kenanga Research added.
Mavcom’s third consultation paper and the new operating agreement (OA) is likely to provide better clarity for MAHB in developing airport networks and implementing service improvements moving forward.
Kenanga Research added that MAHB’s 1H23 system-wide passenger throughput came within expectations, recording 56 million passengers movements which made up 46% of its full-year forecast of 122 million against the 84 million in 2022.
