TA Research noted that MAHB’s 3Q23 performance beat expectations due to higher-than-expected margins.
PETALING JAYA: Malaysia Airports Holdings Bhd
(MAHB) will continue to gain from rising capacity of carriers and passenger movement, following the government’s recent move to allow 30-day visa-free travel for inbound tourists from countries like China and India.
This is set to help the airport operator build on the improved third quarter (3Q23) financial performance that was backed by rising passenger movements and rental revenues, according to analysts.
“The 2024 industry outlook is expected to remain buoyant, reinforced by an increase in capacity of 24% from local carriers and additional 31% from foreign carriers to leverage on the 30-day visa-free travels for China, India and several countries in the Gulf,” TA Research said in a report on MAHB.
It added the company will also get a boost from higher retail spending which increased to RM304 per ticket in 3Q23 versus RM290 in 2Q23 and RM230 in 3Q19, and from the normalisation of rents and royalties offered to tenants upon full recovery in international passenger movements next year.
Another catalyst for MAHB is the signing of a new operating agreement (OA) and announcement of new passenger service charges for 2024.
MAHB’s management believes the new OA and charges could be executed by the end of this year, despite scepticism among analysts.
TA Research noted that MAHB’s 3Q23 performance beat expectations due to higher-than-expected margins.
Profit increased sequentially by 20.9% on account of higher aeronautical revenue from its Turkiye operations (Istanbul Sabiha Gokcen International Airport) and non-aeronautical revenue.
The research house noted minus the impairment on receivables charges of RM25.3mil, unrealised foreign exchange loss of RM30.2mil and other exceptional items, MAHB’s nine-month (9M23) core profit of RM346.2mil beat its expectation at 87.4% of its full-year forecast and 85.4% of consensus estimates.
MAHB’s 3Q23 profit increased sequentially by 20.9% to RM149.5mil, mainly due to higher aeronautical revenue from its Turkiye operations and non-aeronautical revenue.
Total passenger movements in the quarter improved 9.5% and 19.8% q-o-q at MAHB’s Malaysia and Turkiye operations, respectively.
TA Research upgraded MAHB to a “hold” from “sell” with a target price (TP) of RM7.85 a share from RM7.50 earlier.
Kenanga Research however noted MAHB’s 9M23 results missed its forecast and while it expects the recovery of business and leisure air travel to continue going forwards, the absence of significant airport tariffs will cap the company’s earnings potential.
The research house wrote in a report that MAHB’s 9M23 core net profit of RM303mil was at 64% of its full-year forecast largely due to sticky high operating cost.
Kenanga Research cut its FY23 earnings for MAHB by 8% but kept its TP of RM7 a share and “market perform” call.
“We like MAHB for being the dominant airport operator in Malaysia and one of the largest in Turkiye,” the research house added.
