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MAHB shares fall as investors cautious about privatisation deal

Publish date: Thu, 16 May 2024, 03:03 PM

KUALA LUMPUR (May 16): Shares in Malaysia Airports Holdings Bhd (KL:AIRPORT), or MAHB, did not fare well on Thursday, folllowing news of a privatisation offer at RM11 per share led by a consortium of its major shareholder Khazanah Nasional Bhd and the Employees Provident Fund (EPF). 

MAHB’s share price fell 2.88% or 30 sen on Thursday morning to a low of RM10.10. At 11.54am, the airport operator was trading at RM10.20, giving it a market capitalisation of RM16.99 billion, still down 20 sen or 1.92%. The stock was the third biggest loser on Bursa Malaysia at the time of writing. 

“I think [investors] are cautious, and [they] do not like the offer price. I think [they are asking for a higher price],” an analyst who tracks the industry told The Edge.

The joint offerors consisting of Khazanah, the EPF, New York-based Global Infrastructure Partners (GIP) and Abu Dhabi Investment Authority (ADIA) intend to undertake a conditional voluntary offer to acquire all the remaining 1.12 billion shares in MAHB not already held by them for a cash offer of RM11 per share. They also intend to delist MAHB. 

The offer, subject to approvals from the Malaysian Aviation Commission (Mavcom), Turkish Competition Authority, General Authority for Competition of Saudi Arabia and Egyptian Competition Authority, is expected to be completed by the fourth quarter.

Upon completion of the offer, Khazanah will be raising its stake in MAHB to 40% from 33.2%, and the EPF from 7.9% to 30%. The remaining balance 30% will be owned by ADIA and GIP. 

Out of the 15 analysts covering MAHB, seven had ‘buy’ calls on the stock, seven had ‘hold’ ratings, while only one had a ‘sell’ rating. The 12-month target price stood at RM10.12, Bloomberg data showed. 

Meanwhile, local research houses, namely Kenanga Investment Bank, TA Securities, MIDF Amanah Investment Bank and Hong Leong Investment Bank, have all advised minority shareholders of MAHB to accept the buyout offer. 

According to Kenanga, the offer price of RM11 per share translates into 26 times earnings per share (EPS) estimated for the financial year ending Dec 31, 2025 (FY2025), and 20 times the consensus FY2025 EPS. This represents a discount of 26% to 42% to the stock’s closest listed peer, Airports of Thailand, which trades at 35 times consensus FY2025 EPS.

“We believe the price-earnings ratio valuation discount to the closest listed peer, Airports of Thailand, makes sense considering that Thailand’s tourism revenue is three times larger than that of Malaysia,” said Kenanga in a note to clients.

Meanwhile, MIDF commented: “The deal puts the valuation at 9.2 times/7.6 times enterprise value/earnings before interest, taxes, depreciation and amortisation for the actual FY2023 and forecast FY2024 respectively, which we consider reasonable." 

In addition, MIDF expects substantial capital expenditure in the upcoming years for airport expansion and development, potentially leading to a delay in earnings realisation, especially given the uncertainties surrounding the regulatory landscape.

MAHB, which hit a record high of RM10.46 this week, has gained over 36% year-to-date, amid speculation about a possible privatisation exercise.

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