KUALA LUMPUR (March 13): Malaysia Airports Holdings Bhd (MAHB) climbed to its highest in five years on Wednesday as the majority of analysts urged investors to continue buying the stock following the revision in airport tax.

MAHB rose to as high as RM8.69, last breached on Sept 19, 2018. The counter closed at RM8.65 after 4.66 million shares changed hands on Bursa Malaysia. In contrast, the country’s benchmark index FBM KLCI was down 16.43 points or 1.1% to close at 1,538.13 points.

Analysts said the unexpected introduction of the transfer passenger service charge (PSC) by Malaysian Aviation Commission, or Mavcom, could boost the earnings of the company given the dire need for upgrades and expansion of its terminals.

MAHB will likely collect an overall higher revenue through the new transfer PSC and higher departure PSC, as well as incremental aircraft landing and parking charges, said Hong Leong Investment Bank which retained its ‘buy’ call for the stock.

A majority of 12 out of 18 analysts covering MAHB have a ‘buy’ rating while the other six have a ‘hold’ call. The median 12-month target price is RM9.15, according to Bloomberg.

On Tuesday, Mavcom expanded the PSC to cover transfer flights while revising the rates for departures which will be effective from June 1. The revised charges will be in effect till Dec 31, 2026, and are to support the sector's recovery and adaptability post-Covid-19, Mavcom said.

Analyst: Revised PSC may not be enough for MAHB's cashflow

“We are positive on this latest development which is expected to be earnings positive,” said Kenanga Investment Bank. The research house raised its net profit forecast for MAHB by 12% each for 2024 and 2025 to account for the latest tariffs.

While Kenanga raised its target price by 13% to RM9, the house maintained the stock on ‘market perform’ which is equivalent to ‘hold’, cautioning that the latest tariff rate may not be sufficient for MAHB to raise sufficient cash given the urgency for expansion and maintenance.

MAHB runs the country's main gateway Kuala Lumpur International Airport. In addition, the company also operates the adjacent klia2, base of the budget airline AirAsia, and over three dozen smaller airports in the country.

The company’s airports however, are increasingly crowded amid a post-pandemic surge in air travel. This year, Malaysia is targeting to welcome some 27.3 million tourists, an ambitious 35% increase from 2022’s 20.1 million arrivals.

RHB Investment Bank meanwhile flagged that the introduction of transfer PSC and higher parking and landing charges were broadly offset by the reduction in PSC of other categories — particularly International PSC in other airports.

The house lowered its earnings forecast by 1% to 8% for 2024, 2025 and 2026 but nevertheless told investors to buy the stock with a higher target price of RM9.67, citing loss capitalizing mechanism that would allow MAHB to recover 90% of any regulatory losses.

That would allow MAHB to pursue necessary investments, service enhancements and airport development efforts, RHB added.

All international departures from Terminal 1 of the Kuala Lumpur International Airport (KLIA) will incur a PSC of RM73, and RM50 for klia2 or other Malaysian airports for all destinations.

Domestic passengers will also be charged RM7 for transferring through any Malaysian airport and RM10 for transferring through Senai International Airport.

Meanwhile, international passengers will be charged RM42 for transferring through KLIA, and RM29 through klia2 or other Malaysian airports.