KUALA LUMPUR (Oct 23): Malaysia Airports Holdings Bhd (MAHB) is expected to have continued resurgence in both domestic and international passenger traffic, with a return to pre-pandemic levels in calendar year 2024 (CY2024).

In a statement on Monday, Kenanga Research mentioned that the total network of airports’ passenger traffic in the first nine months of 2023 (9MCY2023) increased 53% on a year-on-year (y-o-y) basis to 88 million, which made up 73% of its full-year forecast of 122 million compared to 84 million in 2022.

The research house kept its “market perform” call with a target price of RM7.00 on MAHB, as The Malaysian Aviation Commission (Mavcom)’s recent proposal to peg airport tariffs to the consumer price index (CPI) limits MAHB’s earnings upside.

Kenanga Research expects business and leisure air travel to continue to recover throughout the year, with activity poised to return to pre-pandemic levels in 2024.

Kenanga Research also noted the risks to its call, including endemic and pandemic occurrences that deter air travel, unfavourable terms for airport operations, and risks associated with overseas operations.

Meanwhile RHB Research made no changes to its earnings estimates with a discounted cash flow (DCF)-derived target price (TP) of RM8.70, which incorporates a 4% environmental, social, and corporate governance(ESG) discount, implying 7.5 times 2023 enterprise value over earnings before interest, taxes, depreciation (EV/Ebitda).

“Key risks include lower-than-expected passenger volumes and passenger service charges, or PSCs, as well as higher-than-expected opex (operating expenditure),” RHB Research said.

RHB Research noted that in the traditionally subdued September 2023, MAHB’s local passenger numbers reached 10.3 million (five million and 5.3 million international and domestic passengers, respectively), or nearly 90% of the September 2019 (pre-pandemic) figures.

Notably, international passenger traffic achieved a remarkable 92.5% recovery in September 2023, compared to September 2019, marking the highest monthly recovery.

“We retain our view that the Malaysia segment is poised for a robust 4Q2023 tourism recovery, driven by airline service resumptions, the school holiday peak travel season, and a stronger resurgence in outbound Chinese tourism," it said.

For Türkiye, RHB Research said MAHB’s 9M2023 total passengers was 28.1million — at 73.5% of its full-year estimate — boosted by the summer travel season and strategic airline route expansions.

“As Malaysia and Türkiye’s 9M2023 passenger traffic accounted for 65.6% and 73.5% of our FY2023 estimates, we deem this as [being] in line — we expect a stronger recovery for Malaysia in 4Q2023,” it added.

At Monday's noon break, MAHB shares settled one sen or 0.14% higher at RM7.26, translating into a market capitalisation of RM12.10 billion.