KUALA LUMPUR, Aug 25 — Analysts are positive on Malaysia Airports Holdings Bhd’s earnings outlook, given the recovery in business and leisure air travel.

Kenanga Research said during a recent briefing, MAHB revealed that its passenger throughput recovery is gaining traction in both Malaysia and Türkiye, with passenger movements reaching 82 per cent of 2019’s pre-pandemic level in the first half of 2023 (1H 2023).

Its international passenger throughput for 1H 2023 grew by 147 per cent year-on-year, while its domestic passenger throughput continued to record steady growth, reaching 83 per cent of 1H 2019 level with 29.7 million passengers.

As such, the research house had maintained its ‘market perform’ stance on MAHB, with a target price (TP) of RM7.00.

"We like MAHB for being the dominant airport operator in Malaysia and one of the largest in Türkiye; being a good proxy to the recovery of air travel and tourism locally, regionally and globally; and its strong shareholders who demonstrated unwavering support.

"However, the recent proposal to peg airport tariffs to the consumer price index — despite operating cost rising at a much faster pace — could work against MAHB’s ability to generate enough cash flow for capital expenditure purposes, particularly for airport expansion and maintenance,” it said.

Risks to its call include endemic and pandemic occurrences which could deter air travel, unfavourable terms of airport operations and risks associated with overseas operations.

At the same time, Maybank Investment Bank (IB) upgraded its call on Malaysia Airports Holdings Bhd (MAHB) to ‘buy’ on the airport operator’s better-than-expected Turkish operations.

In a research note, the research firm raised its earnings per share estimates for MAHB for financial year (FY) 2023, FY2024 and FY2025 by 59 per cent, 24 per cent and 20 per cent, respectively, and consequently raised its discounted cash flow- target price (DCF-TP) to RM7.96 from RM6.99 earlier on.

"We expect MAHB’s future quarterly earnings to be better as its partner airlines rebuild their fleet and more airlines return to Malaysia, namely British Airways, Qantas and Lufthansa in FY2024.

"The third quarter of 2023 would be particularly strong for Turkiye due to the peak travel summer months,” it said.

Meanwhile, in a separate note, CGS-CIMB reiterated its ’hold’ call for MAHB, projecting its performance in 2H 2023 to be boosted by traffic growth and rental restoration.

"We reiterate our ‘hold’ call on valuation grounds, with a DCF-based TP of RM7.19, reduced slightly on various offsetting adjustments.

"MAHB’s 1H 2023 core net profit of RM225 million made up 37 per cent of our full-year forecast; we consider this to be in line as we believe 2H 2023 traffic will recover further,” it said.

Upside risks to its call include a higher-than-expected aeronautical tariff hike for FY2024, while downside risks include higher-than-expected operating expenditure as well as a slower-than-expected pick-up in travel in FY2024 and beyond due to airline capacity constraints. — Bernama