Photo by Suhaimi Yusuf/The Edge

KUALA LUMPUR (June 27): MIDF Research recommends accepting the privatisation offer of RM11 per share for Malaysia Airports Holdings Bhd (MAHB) (KL:AIRPORT), while maintaining its 'buy' call on Capital A Bhd (KL:CAPITALA), with a target price of RM1.06.

In a recent note, the research firm said MAHB is actively pursuing 15 additional foreign carriers to operate in the country within the next two years.

"KUL (Kuala Lumpur International Airport) now serves 70 airlines, exceeding its pre-pandemic level of 69 airlines.

"Year to date, approximately seven additional foreign airlines have commenced services to KUL. By year end, three more airlines — British Airways, Thai VietJet, and 9 Air — are expected to commence operations," it added.

MIDF said to enhance air travel, MAHB had made substantial investments in initiatives like the Airline X-celeration Programme, which offers landing fee waivers, airport office rental rebates, and marketing support.

It also noted that about RM3 million had been allocated for marketing support on Malaysia-China routes alone, adding that the recovery rate of this sector stood at 78% in the first quarter of 2024.

Meanwhile, MIDF said passenger traffic in Malaysia continued its upward trajectory, with May 2024 figures reaching an impressive 7.7 million, the second highest for the year following February's peak.

This surge represented a 97% recovery overall, with domestic travel at 95% and international at 99% of the pre-pandemic levels of 2019. The recent public holidays and school vacation period significantly buoyed this growth.

Efforts by both local and international airlines to increase seat availability further fuelled the recovery.

The international sector, in particular, has outperformed the domestic arena for seven consecutive months, largely due to the visa-free waiver policy.

In May, international traffic was bolstered by AirAsia resuming flights from KUL to Bhubaneswar, India, and China Eastern Airlines initiating flights to Wuhan.

Additional new routes include AirAsia's flights from KUL to Ahmedabad, India, and Juneyao Air’s operations from the Penang International Airport to Pudong, China.

Despite the optimistic outlook, MIDF maintained its 'neutral' position on passenger traffic growth.

It cited the Malaysian Aviation Commission's (Mavcom) higher-range forecast, which supports its projection of a 2% growth relative to 2019 levels.

Risks include delays in full reactivation of AirAsia’s fleet, and potential disruptions to Boeing aircraft deliveries to local carriers, which could temper the optimistic projections.

MAHB shares closed 13 sen or 1.4% higher at RM9.73, valuing the airport operator at RM16.2 billion.

Capital A was unchanged at 84 sen, translating into a market capitalisation of RM3.61 billion.