KUALA LUMPUR (Nov 30): TA Securities sees a positive outlook for Malaysia Airports Holdings Bhd (MAHB), against the backdrop of the pending signing of a new operation agreement (OA) and the announcement of the new passenger service charge (PSC) for 2024, and the impairment of receivables comprising mainly RM27.4 million from MyAirline suspension.

“In terms of implementation of the new PSC, it would probably take two to three months for airlines to make all necessary preparations. The management reassured that the new OA would be the ‘enhanced’ version that safeguards the interest of all stakeholders,” TA Securities said in a note on Thursday.

The research house upgraded MAHB to ‘hold’, with a higher target price of RM7.85 (previously RM7.50), based on a discount rate of 14%.

“We revise our earnings projections higher by 8.9%-25.5% to RM496.8 million-RM728.4 million for the financial year ending Dec 31, 2023 (FY2023)-FY2025 to account for higher FY2023/FY2024/FY2025 retail spending assumptions of RM543.4 million/RM754.4 million/RM800.3 million (from RM473 million/RM731 million/RM776 million previously),” the research house added.

Moving ahead, the research house expects MAHB to gain strong momentum, on the back of increasing capacity of 24% from local carriers and an additional 31% from foreign carriers. To note, from Dec 1, 2023, citizens of China and India can enjoy visa-free stays of up to 30 days in Malaysia.

TA Securities expects MAHB's earnings to remain buoyant, on the back of higher retail spending, which increased to RM304 per ticket in the third quarter ended Sept 30, 2023 (3QFY2023), versus RM290 in 2QFY2023 and RM230 in 3QFY2019, supported by normalisation of rental and royalties without discounts given to tenants upon full recovery of international passenger movements next year.

The airport operator reported on Wednesday its net profit stood at RM94.76 million for 3QFY2023, against a net loss of RM9.04 million for the previous year, on the back of an increase in revenue, other income, and improved share of profits from associates and joint ventures, plus lower finance costs.

Quarterly revenue jumped by 48.32% to RM1.28 billion from RM863.61 million, fuelled by higher revenue contributions from its Malaysian, Türkiye, and Qatar operations.

For the nine-month period ended Sept 30, 2023 (9MFY2023), the group posted a net profit of RM255.47 million, against a net loss of RM171.94 million for 9MFY2022, underpinned by lower finance costs and higher revenue. Revenue climbed by 66.98% to RM3.54 billion from RM2.12 billion.

TA Securities said the results beat expectations at 87.4% of its full-year forecast, and 85.4% of the consensus estimate, on the back of higher-than-expected margins resulting from improved operational efficiency.

At the time of writing on Thursday, shares in MAHB had shed eight sen or 1.1% to RM7.22, giving the airport operator a market capitalisation of RM12 billion.

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