A consortium comprising Khazanah, Employees Provident Fund (EPF), New York-based Global Infrastructure Partners (GIP), and Abu Dhabi Investment Authority (ADIA) is taking AIRPORT private at RM11.00/share cash. We rationalise our TP to the offer price of RM11.00 (from RM9.00) and our call to ACCEPT OFFER from MARKET PERFORM.

A consortium comprising Khazanah, EPF, New York-based GIP, and ADIA is buying out AIRPORT shares not already owned, translating to a 67.01% stake for RM12.3b or RM11.00/share cash. The consortium does not intend to maintain the listing status of AIRPORT. The proposed offer is expected to be completed by 4Q 2024.

At the offer price of RM11.00/share, it translates to 26x and 20x our FY25F EPS and FY25 consensus EPS, respectively. This implies a discount of 26%-42% compared to closest listed peer Airport of Thailand which trades at 35x consensus FY25F EPS. We believe the PER valuation discount to closest listed peer i.e. Airport of Thailand makes sense considering that Thailand’s tourism revenue is 3x larger than Malaysia’s.

Upon completion of the offer, Khazanah will be increasing its ownership in AIRPORT from 33.2% to 40% and EPF from 7.9% to 30%. The remaining balance 30% will be owned by ADIA and GIP. GIP is an infrastructure investment fund involved in equity and selected debt investments. Its key notable infrastructure assets include stakes in London Gatwick, Edinburgh Airport Limited and London City Airport.

Valuations. We rationalise our TP to the offer price of RM11.00 (from RM9.00) and our call to ACCEPT OFFER from MARKET PERFORM.

Risks to our call: The consortium fails to secure a 90% stake to make the privatisation mandatory.

Source: Kenanga Research - 16 May 2024