INVESTMENT HIGHLIGHTS

• Organized corporate visit to Mitsui Outlet Park (“MPO”)

• The retail space is partly owned by MAHB

• Occupancy rate is at its highest

• Value chain enhancement for MAHB

• Maintain BUY with an unchanged TP of RM9.88

We visited Mitsui Outlet Park recently, on 6th June 2018, meeting the management of both Mitsui and MAHB. We wanted to learn more about the non-aeronautical side of MAHB’s business and its prospect moving forward. This time around, the focus was on the development of outlet malls in Malaysia and we believe MAHB’s venture into this category could be of another enhancement to its long-term strategic plan of becoming an airport city. Notably, this outlet mall visit to Mitsui Outlet Park was subsequent to our visit at Genting Premium Outlet where we did a report entitled; “Steady Outlook For Outlet Malls in Malaysia”

Mitsui Oulet Park is a project under MFMA Development Sdn. Bhd. It is a JV where MAHB owns 30% and is responsible for the construction of the outlet store buildings and management of lease tenants. The other shareholder is Mitsui Fudosan Co. Ltd. which owns 70%. It is located 6km from KL International airport, which is about eight minutes away. The development of Mitsui Outlet Park was carried out in three phases. Upon completion, total site area will be around 178,900 sqm and retail space of 44,000 sqm (473,612 sqf). In terms of retail space, it will be +18.4% bigger in comparison to its nearest competitor and the current biggest outlet malls, Genting Premium Outlet. According to the plan, Mitsui Outlet Park is expected to offer 250 lettable outlet shops by 2021. According to the management, average rental rate stood at RM19/sqf.

Occupancy Rate now at its high. Currently, overall occupancy rate stands at 97% and expected to ease to 95% following the completion of overall development. Tenant mix comprises of luxury, international and local brands in fashion, cosmetics, sports and accessories. More offerings will include for entertainment and amusement. The management mentioned that average footfalls on weekdays/day stood at seven thousands, which will double on weekends and major public holidays. As far as promotional campaign is concerned, shops on average will offer 50% discount from original price on weekdays, and could go up to 90% on major public holidays.

Source: MIDF Research - 8 Jun 2018