Malaysia Airports Holdings Berhad reported a core PAT of RM176.9m for 1QFY24 whereby the result aligns with expectations, representing 25%/23% of consensus estimates said MIDF in its report of the counter.
On a quarterly basis the airport operator reported its highest-ever core PAT for 1Q at RM176.9m, marking more than a fourfold increase against 1QFY23. The total passenger traffic has recovered to 93% in 1QFY24 (Malaysia: 86%, ISG: 117%), predominantly driven by the international traffic at Istanbul SGIA. Its commercial and retail rejuvenation initiatives have resulted in an operational occupancy rate of 80% (FY19: 79%), on track to reach 86% by Dec-24. Furthermore, the enhanced product offerings at Eraman (its duty-free brand) have led to an increase in the average spending per ticket, reaching RM338 (FY19: RM233) in 1QFY24. Sequentially, despite the seasonally weaker quarter, the increase in earnings was mainly supported by reduced operating expenses and depreciation costs.
Notably, the total passenger traffic in May-24 has reportedly surpassed the levels recorded in CY19. There is considerable potential for expansion within Malaysia’s non-ASEAN sector, attributed in part to China’s visa-free policy that was recently extended to end-FY25. The recovery of this sector has reportedly reached 78% in 1QCY24. The number of airlines serving Malaysia stood at 69 in 1QCY24, matching the levels seen in CY19, with four new carriers slated to enter the market
later this year. Meanwhile, expansion plans for Penang airport are set to commence in 2HCY24, with an estimated cost of RM1.55b. The state government is contributing RM150.0m, while MAHB is initially investing RM700.0m, to be recovered via a temporary reduction in user fees (set to be lower by -4% from 2HFY24 for 6 years and capped at RM120.0m per annum). MAHB plans to raise the remaining RM700.0m through the capital markets.
The house revised its FY24F/FY25F earnings upwards by +6%/+11% after taking into account the funding for the Penang airport expansion. MIDF raised the fair value at RM9.40 from RM8.75 (WACC: 11%, g: 1%). The stock is currently trading at 6.8x FY25 EV/EBITDA, compared to its 5-year average of 9.3x. The house said it the pre-conditions of the privatisation offer are met or waived, it advises investors to accept the buyout offer at RM11.00 per share, which represents a +17% premium to our fair value.
