AIRPORT’s 1HCY24 passenger throughput jumped 16% YoY, in line with our expectation. We expect the recovery of business and leisure air travel to continue throughout FY24. For AIRPORT, the poser is if the proposed privatisation by a consortium at RM11.00/share will be accepted by its minority shareholders. We keep our forecasts, TP of RM11.00 and ACCEPT OFFER call.

1HCY24 system-wide passenger throughput meets our expectation. AIRPORT’s 1HCY24 system-wide passenger throughput (including Istanbul SGIA) came in within our expectation. Total network of airports’ passenger traffic continued to gain traction in 1HCY24, recording 65m (+16% YoY) which made up 49% of our full-year forecast of 131m (vs. 119m in 2023). As an indication that traffic recovery has continued to show buoyancy, 1HCY24 passenger movements reached 95% of CY19 level underscoring the underlying demand for air travel. Specifically, international passenger throughput of 34m for 1HCY24 grew 29% partly driven by visa exemptions for Chinese and Indian travellers, the expansion of the airlines network directed towards the international sector and introduction of new routes, and increasing trends in traveling during the festive seasons. Domestic passenger throughput continued to record a steady growth, reaching 87% of 1HCY19 level with 30.9m passengers (+4% YoY).

Its Malaysia operation’s total passenger movements for 1HCY24 grew by 16% and reaching 87.9% of 1H19 levels, boosted by international passengers recording 23.6m (+16%) which more than offset lower domestic passengers (-1%). Similarly, its Türkiye operation namely Istanbul SGIA’s traffic continued to exhibit positive momentum. Passenger movements for Istanbul SGIA continued to show resilience in 1HCY24, recording 20m passengers reflecting a 16.4% increase over 1HCY23 and a double-digit increase of 18.1% over 1H19. Malaysia Airports welcomed six new airlines (Cambodia Airways, Flydubai, Iraqi Airways, Juneyao Airlines, Thai Lion Air and Turkmenistan Airlines) in 1HCY24, boosting total seat capacity recovery to 85%, with 57m seats compared to 67.3m in the 1H19. Additionally, the average load factor for 1HCY24 exceeded 1H19 by 3.4 percentage points at 78.8% with an increasing growth trend each month during 1HCY24, an indication of a positive demand pull that potentially could boost higher seat capacity offerings.

Forecasts. Unchanged.

Valuations. Our TP is the offer price of RM11.00 and our call is ACCEPT OFFER.

Risks to our call include: The consortium fails to secure a 90% stake to make the privatisation mandatory.

Source: Kenanga Research - 23 Jul 2024