UOBKH Research said MAHB’s near-term earnings outlook remains resilient.
PETALING JAYA: UOB Kay Hian (UOBKH) Research is maintaining a “buy” call on Malaysia Airports Holdings Bhd
(MAHB) with a higher target price of RM8.32 from RM8.16 on the back of an anticipated recovery in travel this year.
In a note, the research house said MAHB will be the prime beneficiary of the recovery in the aviation sector while anticipating the group will record a strong rebound in earnings in the upcoming quarters backed by improved passenger throughput.
“MAHB’s near-term earnings outlook also remains resilient as it rides the recovery of passenger traffic and improving commercial and retail operations. The finalisation of the revision of 2024 airport charges and the new operating agreement are the key rerating catalysts,” the research house added.
Notedly, passenger traffic to Malaysia improved by 28% to 6.6 million in November 2023 on the back of an increase in airline seat capacity.
However, UOBKH Research also said that traffic in Malaysia reported a third consecutive month-on-month decline last November since it peaked at 7.4 million passengers in August, attributed partially to the seasonally lower travel demand and the unexpected decline in domestic capacity since mid-October 2023.
The research house said, cumulatively November traffic was in line with its expectations at 86.6% of its full-year 2023 traffic projection.
The international sector continued driving traffic performance throughput, hitting a commendable recovery of 82% against pre-Covid levels.
“Thus, we maintain our projection which implies recovery rates of 76% for international passengers and 87% for domestic passengers. Taking a cue from the accelerated traffic recovery in 2023, we raise our full-year 2024 and 2025 traffic assumptions by 3% and 2%, respectively,” the research house said.
Additionally, the airport group’s other operations from the Sabiha Gokcen International Airport’s (SGIA) have been resilient, evident by the 12.4% year-on-year (y-o-y) increase in throughput to three million passengers last November.
“Cumulative traffic for the month also came in higher by 21% y-o-y at 34.4 million passengers, broadly outpacing 2019 levels by 4%, as a result of the substantially higher number of international passengers,” it said.
UOBKH Research added SGIA’s anchor airline, Pegasus Airlines, is expected to expand its current fleet of 105 aircraft to 150 by 2029, thus laying the foundation for sustainable traffic growth at the airport.
