PETALING JAYA: Malaysia Airports Holdings Bhd (MAHB) is expected to have a resilient and positive outlook based on the anticipated recovery of tourists from China and Turkiye, says RHB Research.
In a note, the research house said it will continue to favour MAHB because of this, as China’s outbound numbers are showing good recovery signs.
“Data has revealed China’s international airlines have resumed their capacity at a steady pace. As of June 2023, the Malaysia-China capacity and passenger movements have recovered to 57% and 40% of pre-Covid-19 levels, respectively, marking significant improvements since the tourist giant reopened its borders,” it said.
It added that while it does not expect a full recovery this year, it is definitely underway and on the right track.
“We are positive that international tourism may improve further from the fourth quarter this year onwards, based on China’s encouraging recovery trend,” it said.
On international travellers from Turkiye, RHB Research said it expects the Sabiha Gokcen International Airport’s international traffic momentum to sustain into the second quarter this year, in view of the strong year-end seasonality and upcoming new airlines and its routes.
“We adjust financial year 2023 (FY23) traffic assumptions to better reflect the potential upside from the Turkiyish operations, as previous assumptions of international traffic were a tad bit conservative,” it noted.
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RHB Research said for the first seven months of this year (7M23), international and domestic passenger numbers coming through Malaysian airports stood at 20.9 million and 25.4 million, representing 44.2% and 49.5% of its full-year forecast respectively.
“On the Turkiyish side of MAHB’s operations, 7M23 international and domestic passenger movements stood at 10.9 million and 9.98 million or 70% and 46% of our FY23 estimates respectively, which is above our expectation,” it said.
Additionally, RHB Research said another key factor that is looking positive for MAHB is the expected gazetted passenger services charges for regulatory period 1 that will be published soon in the Malaysian Aviation Commission’s Third Consultation Paper.
In line with these, RHB Research has maintained its “buy” call on the airport operator and increased its target price to RM8.70 from RM8.31 previously.
It, however, revised its FY23, FY24 and FY25 earnings to minus 3%, 9% and 12%, respectively, to account for the net effect from a delayed recovery from China and stronger international tourism movements in Turkiye, moving forward.
“We still prefer MAHB within our sector coverage, given the stock’s current earnings before interest, taxes, depreciation and amortisation valuation of 5.58 times, still undemanding vis-a-vis the pre-Covid-19 valuation of 8.1 times,” RHB Research said.