KUALA LUMPUR (Jan 10): Maybank Investment Bank (MIB) maintains a "buy" but a lower target price on Malaysia Airports Holdings Bhd (MAHB) as its turnaround this year, driven by the increasing traffic, and China’s reopening, is expected to be offset by the payables due to the Turkish government.
“We also flag that MAHB will likely resume paying dividends this year as it returns to profitability,” said the research house.
Maybank IB noted that MAHB have to pay Istanbul Sabiha Gokcen (ISG) its utilisation fees for financial year 2021-2022 (FY2021-FY2022) due to the Covid period.
While the group has received a discount on the fees amounting to EUR$114.8 million per annum on December 28, 2022 payable by end of FY2025, Maybank IB was expecting all the fees to be waived.
“MAHB did not state the discount but we estimate it to have been 45% based on the PSCs that ISG received in FY2021 and FY2022 relative to FY2019,” according to research analyst Yin Shao Yan.
In addition, Yin expected that MAHB’s Malaysian pax traffic to average 90% of pre-Covid levels in financial year 2023 estimate (FY2023E), as currently the average was 78% of pre-COVID levels in FY2023 due to slower-than-expected return to service of Malaysian AirAsia’s aircrafts.
“Thus, we cut our FY2023 core net profit by 36%. Yet, we still expect MAHB to return to profitability in FY2023.”
Nevertheless, the domestic pax traffic is expected to average at 100% of pre-Covid levels in FY2024E as Malaysia AirAsia returns its entire fleet to service by then, while the non-listed MYAirline expands its services.
“Moreover, we now expect MAHB’s Malaysian international pax traffic to average at 85% of pre-Covid levels – 80% previously – in FY2024.”
“This is premised on 1.3 million Chinese visitors or two-thirds of pre-Covid levels returning then. Net impact of the above is to raise our FY2024 core net profit by 10%.”
MIB has maintained its call to ‘buy’ with a target price of RM7.31 on MAHB.
At the time of writing, the group’s share price has increased to 13 sen or 1.87% at RM7.08. Its market capitalisation was RM11.70 billion.