Review

• Malaysia Airports’ (MAHB) 9M24 core profit of RM566.7mn, after stripping out net writeback of impairment of RM49mn and other exceptional items came in within expectations.

• 9M24 core profit jumped 63.7% YoY to RM566.7mn on the back of 20.3% YoY rise in revenue to RM4.3bn. We attribute the decent performance to: 1) increase in airline capacity, thereby supporting the growth in passenger movements and led to higher aeronautical revenue; 2) touristfriendly policy, which boosted air travel demand; 3) increase in retail sales and rental income.

• For this quarter, the group’s aeronautical rose 17.5% QoQ and 27.0% YoY to RM891.5mn (Figure 1), while non-Aeronautical revenue increased by 0.5% QoQ and 9.7% YoY to RM542.4mn, driven mainly by rental and royalties (Figure 2). 3Q24 total passenger movements increased 9.7% YoY, led by a robust 26% growth in the international segment of Malaysia operations.

Impact

• No change to our FY24-26 core earnings projections.

Outlook

• MAHB has received the notice of take-over offer (see MAHB report dated 16 May 2024) on Nov 22 and the offer document and acceptance form will be despatched within 21 days from the date of the notice. An independent advice circular from Hong Leong Investment Bank will be despatched within 10 days from the date of despatch of the offer document. Take note that the take-over offer is conditional upon 90% of valid acceptances. However, the offeror reserves the right to revise the level of the acceptance condition to a lower level.

• Operating-wise, the outlook remains encouraging with increasing flight capacity to meet the overwhelming demand. According to management, there were 13 new airlines launched services to Malaysia for 9M24 with another 2 to come in 4Q24, bringing the total operating airlines in Malaysia to 75 versus 69 in 2019. These new and existing airlines have added 52 new services mainly to ASEAN, China and India

• Moving forward, we look forward to 2 mega events in 2025 namely, Asean Summit and World Tourism Day, to be hosted in Malaysia to attract participants from over 150 countries.

Valuation

• The take-offer price of RM11.00 is at record-high, indicating all shareholders would make some investment gains. As such, we do not think it is a daunting task to achieve the 90% of valid acceptance. We maintain MAHB’s target price at RM11.00/share and advise the shareholders to accept the offer.

Source: TA Research - 27 Nov 2024