• Keep NEUTRAL and MYR11 TP, 4% upside. Malaysia Airport’s 9M24 performance was in line with our and Street estimates. As all the four preconditions to the privatisation deal have been met, MAHB is one step closer to being delisted. Given the offer price exceeds our estimated valuation, we advise investors to accept the privatisation offer.

• Results review. 3Q24 revenue of MYR1.5bn (+11% QoQ, +20% YoY) was driven by growth across all business segments, mainly the airport operations – aeronautical revenue rose 18% QoQ and 27% YoY, in tandem with the rise of international passengers while non-aeronautical increased 2% QoQ and 12% YoY. This resulted in 9M24 revenue rising 20% YoY to MYR4.3bn. The solid YoY growth is in line with the ongoing traffic recovery, which saw a higher international passenger mix, resulting in higher passenger service charge and retail spending. Consequently, 9M24 core earnings came in at MYR592m, at 75% and 74% of our and consensus estimates.

• Inching closer to the pre-pandemic level. In 3Q24, MAHB’s Malaysia operations handled 24.8m passenger movements, up 7% QoQ and 14% YoY. This translated to a pre-pandemic recovery rate of 92%, up from 78% in 2023. YTD, Malaysia operations have reached a recovery rate of 89%, thanks to the international traffic which rose 32% YoY. China passenger movements have also recovered and exceeded the pre-pandemic level in 3Q, making up c.15% of passenger traffic for the Malaysia operations. On the other hand, Turkiye operations continued to surpass the 2019 level, which it is currently at a 116% recover rate YTD.

• Outlook. The group remains optimistic that passenger traffic will continue to recover, mainly supported by international passenger movements on top of existing favourable polices in place such as visa waivers as well as more swift immigration processing (eGate access). However, we believe our assumption for passenger movements in Malaysia of 105.9m in 2024 is too bullish, given 10M24 traffic makes up only 75% of our FY24 forecast. As such, we cut our 2024 Malaysia passenger traffic forecast to 95.2m.

• Keep NEUTRAL with an unchanged MYR11 TP. We cut our FY24F-26F earnings by 1-3% after imputing lower passenger traffic assumption while imputing higher contribution from the JV and associates to better reflect the current performance. Regardless, our estimated valuation remains below the privatisation bid of MYR11, and as such, we keep our TP unchanged at MYR11, to match the offer price.

Source: RHB Securities Research - 27 Nov 2024