KUALA LUMPUR, April 17 ― Maybank Investment Bank Bhd (Maybank IB) maintained its positive view on the aviation sector amid rising tensions in the Middle East, potential impacts on passenger traffic to and from the region, alongside fluctuations in jet fuel prices.
However, it estimated that under a worst-case scenario where passenger traffic to and from the Middle East ceases completely, MAHB’s earnings are projected to slide by 26 per cent on a full-year basis, while its share target price (TP) will be cut to RM6.61 (-26 per cent).
“We fear that passenger traffic to and from the Middle East will impact its Malaysian and Turkish operations. MAHB has not released its 2023 airport statistics which details passenger traffic from that region.
“Examining its 2019 (pre-pandemic) airport statistics, passenger traffic to and from the Middle East accounted for seven per cent of international passenger traffic at KLIA and 28 per cent of international passenger traffic at Istanbul Sabiha Gokcen,” it said in a research note today.
As for Capital A and AAX, Maybank IB said the main concern is the impact of higher jet fuel prices as none of Capital A’s four airlines fly to Middle East destinations.
“At press time, spot jet fuel prices have not deviated far from our forecast of US$105 per barrel at US$104 per barrel.
“AAX does fly to Jeddah, Saudi Arabia but we understand that this destination accounts for only between 5.0-7.0 per cent of its total available seat kilometres, but like Capital A, our main concern for AAX is higher jet fuel prices,” it added.
The investment bank estimated that every US$1 per barrel increase in jet fuel price will lower its core net profit estimates by RM14 million and sum-of-parts-based (SOP) TP by 24 sen.
It further said that earnings estimates, calls and TPs are under review.
At 11.37am, MAHB’s shares slid 20 sen to RM9.86 with 452,800 shares traded; AAX was one sen better at RM1.25 with 193,400 shares changing hands; while Capital A was half-a-sen better at 67.5 sen with 2.44 million shares traded. ― Bernama
