KUALA LUMPUR, March 21 — The new operating agreement (OA) between Malaysia Airports Holdings Bhd (MAHB) and the Malaysian government is “well crafted in offering some safeguards to MAHB’s earnings and cash flow,” said Maybank Investment Bank Bhd.
The new OA has a few safeguards for MAHB, it noted.
“Three things caught our attention, that MAHB will be compensated fully if passenger service charges (PSCs) were reduced going forward.
“(Also) user fee rates (13.1 per cent of Malaysia airport revenue in the financial year 2023) can be reviewed every three years instead of being consistently raised by 25 basis points per annum, and 50 per cent of the user fee charged on PSCs will go to an Airport Development Fund (ADF) controlled by the government,” it said in a note.
Maybank IB said that the Malaysian Aviation Commission (Mavcom) will release another consultation paper that will guide the Regulated Asset Base (RAB) model that MAHB will employ from Jan 1, 2027. “Until then, we maintain our estimates, ‘hold’ call and RM8.91 target price.”
Hong Leong Investment Bank Bhd (HLIB) said the OA has effectively strengthened MAHB’s position in Malaysia with earnings certainty for the next 35 years.
“MAHB will benefit from the higher airport service charge (including PSC) revenue and cash flow, while benefiting from the recovery of air travel and improving international passenger mix (higher passenger tariff and spending power).
“We expect MAHB to record stronger earnings in the financial years 2024-2025,” it said in a note.
HLIB reaffirmed its “buy” recommendation with a higher target price of RM10.25 (from RM9.80) for MAHB.
“MAHB can also now renegotiate with the government regarding the user fee contribution (every three-year cycle) to reallocate for necessary airport development purposes,” it added.
On March 18, the Malaysian government, via the Ministry of Transport, and MAHB inked new operating agreements (OAs) for 45 years until Feb 11, 2069.
The airport operator will continue to operate, manage, maintain, and develop 39 airports and STOLports (short take-off and landing airports) nationwide. — Bernama
