• Maintain NEUTRAL and MYR11 TP, 4% upside.Malaysia Airports is on track to be privatised following the final pre-condition being met, ie Malaysian Aviation Commission’s (MAVCOM) approval. We do not expect any negative surprises and believe MAHB is set to be delisted by 1Q25. We keep our call and TP, matching the offer price. We recommend investors accept the deal, as the offer exceeds our estimated valuation.

• Final approval secured. MAHB announced that the Khazanah Nasional (Khazanah)-led consortium finally got the greenlight from MAVCOM for its privatisation. This is one of four preconditions the consortium needed to satisfy, with approvals from General Authority for Competition of Saudi Arabia, Egyptian Competition Authority and Turkish Competition Board being the remaining three, which the joint offerors had previously secured.

• To recap, Khazanah, together with Employees Provident Fund (EPF) and Global Infrastructure Partners (GIP), first announced on 15 May its intention to take MAHB private via a consortium, ie Gateway Development Alliance (GDA) by acquiring the remaining MAHB shares not owned by the offerors, ie 1.1bn shares or 67% of total shares. With an offer price of MYR11/share, this translates to MYR12.3bn worth of shares to be acquired by the consortium. If the acquisition materialises, which is a voluntary take-over offer,Khazanah, EPF and GIP will own 40%, 30%, and 30% of MAHB’s shares.

• What’s next? This marks another milestone achieved by GDA to get MAHB privatised, as it has satisfied all four pre-conditions. We believe shareholders’ approvals should not be required as this is a voluntary takeover with an offer to be made to all remaining shareholders. Note: This deal is subject to a minimum acceptance that will result in joint offerors owning at least 90% of total MAHB shares. This coincides with the delisting threshold, in line with the intention to take MAHB private. The offer price remains unchanged, at MYR11/share. The offer document will be extended to the remaining shareholders within 21 days from today. The shareholders will have 21 days (from the date the offer document is posted ) to accept this offer.

• Call and TP maintained. With the MAVCOM approval secured – as we anticipated – we believe MAHB is on track to get delisted with no material pushbacks expected. Considering the share price has been edging closer to the offer price, we believe this signals market’s confidence that this deal will likely go through.We keep our NEUTRAL call on the counter. Our MYR11 TP remains unchanged, which matches the offer price.

• Key downside risks include lower-than-expected passenger volumes as well as the privatisation exercise falling through. The opposite represents the upside risks.

Source: RHB Securities Research - 18 Nov 2024