• We maintain our forecasts and fair value of RM6.64 based on 22x FY22F EPS. This is at a 40% discount to the FY22F P/E of 36x of its peer, Airports of Thailand (AoT), to reflect Malaysia’s smaller tourism market vs. that of Thailand, coupled with a higher operating risk of MAHB’s Sabiha Gokcen International Airport (ISG) in Istanbul, Turkey. Malaysia Airports (MAHB). Maintain BUY.

• MAHB has recently introduced a new airport retail rental model and relief package as part of its efforts in retaining and attracting business partners under its ongoing commercial reset strategy.

• Among the initiatives include restructuring of rental payment, rental rebates of up to 30% for tenants participating in the ongoing airport commercial reset programme (depending on the shop’s location and reduction in footfall), as well as a temporary rental rebates of up to 50% for SMEs for 6 months.

• This will translate into dents of RM45mil (from the 30% rental rebates under the commercial reset programme) and RM22mil (from the temporary rental rebates of 50%) to MAHB’s budget, which make up less than 3% of our FY20F revenue assumption.

• We maintain our forecasts as we have already assumed certain rebates to its tenants, in line with the practice in the industry during the pandemic.

• We continue to like MAHB as: (1) we believe the air travel and tourism industries will gradually return to their growth path post- pandemic; (2) MAHB is a good proxy given its dominance in the airport segment locally, and its significant market share in Turkey; and (3) given its strategic position in the economy, we believe it warrants stronger support from various stakeholders that should help to tide it through the pandemic and the current downturn in the air travel market.

Source: AmInvest Research - 4 Sept 2020