INVESTMENT HIGHLIGHTS

• 1HFY19 normalised earnings in line with expectations

• Domestic traffic growth outpaced international traffic

• Favourable mix of above 50% for international passengers maintained

• Cost per passenger well contained at RM33.80 per passenger

• Maintain BUY with an unchanged TP of RM9.43 per share

Within expectations. MAHB’s 2QFY19 recorded normalised earnings (after excluding one-off gains) of RM146.0m. This brings the 1HFY19 normalised earnings to RM304.4m (+9.2%yoy). The results came in within our full year estimates at 54.5% but beat consensus’ expectations at 56.1%.

Domestic traffic grew faster than international traffic. The 1HFY19 revenue (excluding construction revenue) rose by +9.2%yoy. This was in-line with the overall +4.4%yoy growth of passengers’ traffic in both Malaysia and Turkey for the period. MAHB’s domestic traffic growth in Malaysia during 1HFY19 of +8.2%yoy outpaced its international traffic growth of +1.6%yoy as airlines redirected more capacity to meet the domestic travel during the Hari Raya Aidilfitri festive season. It was notable that the Aidilfitri holidays fell on and 5th and 6th June 2019 which coincided with the second week of school holidays, propelling the higher demand.

The international passenger mix remains favourable above 50%... Although the international traffic did not grow as much as the domestic traffic 1HFY19, but it recorded the best ever first half performance in a given year. The occurrence of summer holidays for the United States and certain cities in Germany such as Berlin was an underpinning factor for the growth in international traffic. In fact the international passenger movements continued to retain more than 50% of the passenger mix in Malaysia while the introduction of the passenger security service charges for international departing passengers helped to drive the +17.2%yoy growth in PSC revenue during the period.

Source: MIDF Research - 3 Sept 2019