KUALA LUMPUR (March 27): Malaysia Airports Holdings Bhd (MAHB) hit new record high on Wednesday after the company signed new operating and land lease agreements with the government that extended the concession to manage 39 airports in the country for another 35 years.

MAHB jumped as much as 39 sen, or 4.05%, to RM10.02 on Wednesday, the highest it has ever reached since the company was listed in November 1999. The previous record-high was recorded at RM9.86 in August 2018.

As at 3pm, the counter pared some of its gains but was still up by 30 sen, or 3.12%, at RM9.93, valuing the group at RM16.57 billion after some five million shares traded. 

The maiden partnership between IOI Properties Group (IOIPG) and Mitsubishi Estate Residence bore fruit with the completion in January 2024 of GEMS Residences in IOI Resort City, Putrajaya, offering holistic multi-generational wellness living inspired by Japanese approaches to community-based care and design.

MAHB’s share had initially slip, falling 13 sen during the week of March 18 - the week where the announcement of the new operating agreements was made - to close at RM9.10 on March 22.

However, the stock opened higher on Monday and has been on an upward trajectory since then. 

The new terms of the agreement between MAHB and the government include several notable transformative procedures. First, it facilitates flexible funding of airport developments, either through government allocations via development expenditure (DE) or by MAHB through any appropriate investment recovery model mechanism, or any other finance model mutually agreed upon by both parties.

Second, it provides for the establishment of the Airport Development Fund (ADF), set up to receive contributions from airport users, the public and airlines to fund future airports’ capital expenditures.

While the new operating agreements offer a relief to MAHB's capital expenditure, Kenanga Research opined that the financial impact remains immaterial. Kenanga Research maintained its forecasts, a target price of RM9 and a “market perform” call on MAHB.

Offering another perspective, MIDF Research which has a “neutral” call and a target price of RM8.75 on the stock, stated that under the new operating agreements, the undertaking of development capital expenditure can be done through several channels, such as introducing project financing from the capital market, using funds offered by the government, implementing the ADF, or by adapting any other bankable finance model.  

https://www.theedgemarkets.com/node/706155