CGS-CIMB keeps 'add' on MAHB, raises target price to RM7.60

KUALA LUMPUR (April 6): CGS-CIMB Research has maintained its “add” rating of Malaysia Airports Holdings Bhd (MAHB) at RM6.88 with a higher target price (TP) of RM7.60 (from RM7.05) as it raised passenger traffic forecasts for both Malaysia and the Istanbul Sabiha Gokcen International Airport (ISG).

In a note on Tuesday (April 5), the research house said the reopening of Malaysia’s borders from April 1, 2022 was earlier than the house's previous mid-2022 forecast and the ISG’s international traffic had been strong.

CGS-CIMB raised its 2022 domestic traffic forecast by 21% (from 70% of the pre-Covid-19 pandemic base in 2019 to 85%), and raised its 2022 international traffic forecast by 60% (from 25% of the pre-pandemic base to 40%).

“Our new forecasts are reasonable because in February 2022, Malaysia’s domestic traffic already reached 69% of the 2019 base, and we expect a new airline, MYAirline, to commence operations from August.

“Meanwhile, AirAsia and Malaysia Aviation Group said that they plan to restore 90% and 70% of their pre-Covid-19 passenger capacities by end-2022 respectively, which we think will be largely international in nature, given that they have both concentrated on domestic capacity restoration in the past six months,” it said.

Valuation and recommendation

“We reiterate our 'add' recommendation on MAHB, with a higher discounted cash flow-based TP of RM7.60 (from RM7.05).

“The strong recovery in Malaysian domestic traffic is very encouraging and passenger traffic at Turkey’s ISG has also picked up robustly,” said CGS-CIMB.

The research house said the reopening of Malaysia’s international borders to quarantine-free travel from April 1, 2022 onwards (for those who are fully vaccinated against Covid-19) is a very positive development and should stimulate a strong pickup in airline seat capacity and passenger volumes.

At 9.47am on Wednesday, MAHB had added 1.89% or 13 sen to RM7.01, with 874,600 shares traded.