Investment Highlights

• We now project a wider FY21F net loss of RM687.6mil and a smaller net profit for FY22–23F of RM261.0mil and RM481.1mil (vs. net losses of RM318.6mil and net profit of RM501.3mil and RM556.8mil projected previously). We tweak our fair value (FV) down slightly to RM6.57 (from RM6.65) based on 22x revised FY23F EPS (vs. 22x FY22F EPS previously). This is at a discount to the FY23F P/E of 33x of its peer, Airports of Thailand (AoT), to reflect Malaysia’s smaller tourism market vs. that of Thailand, and a higher operating risk of MAHB’s Sabiha Gokcen International Airport (ISG) in Istanbul, Turkey. Our FV has been adjusted for a 3% premium to reflect a 4-star ESG rating as appraised by us (Exhibit 5). Maintain BUY.

• MAHB's 1QFY21 core net loss of RM223.6mil came in wider than expectations, vs. our full-year net loss forecast of RM318.6mil and the full-year consensus net loss of RM535.5mil. We believe the variance against our forecast came largely from the lower-than-expected passenger volume on the resurgence in Covid-19 cases both locally and regionally.

• MAHB's 1QFY21 revenue fell by 64% YoY on the back of a 77% contraction in passenger movements amidst low air travel demand due to Covid-19 travelling restrictions. The YoY deterioration was due a full-quarter impact of the pandemic (vs. only one month or less in 1QFY20 when the pandemic just started). Not helping either, was the temporary erosion of commercial rentals from a recently extended relief package in response to the pandemic situation.

• To recap, among the initiatives under the relief package are restructuring of rental payment, rental rebates of up to 30% for tenants (depending on the shop’s location and reduction in footfall), as well as a temporary rental rebates of up to 50% for SMEs.

• In terms of cost, MAHB achieved 22% core operational costs savings (vs. its target of 20%) via efforts such as cutting staff, utilities and maintenance costs and retail expenses such as advertising, commissions and discounts.

Source: AmInvest Research - 31 May 2021