KEY INVESTMENT HIGHLIGHTS

• 3QFY24 results met expectations
• Passenger recovery hits 98%, ISG leads
• China sector has fully recovered
• No changes to earnings estimates
• Accept buyout offer at RM11.00

Within expectations. Malaysia Airports Holdings Berhad (MAHB) posted a core PAT of RM152.5m for 3QFY24, bringing the cumulative total to RM520.8m for 9MFY24. The results were in line with our expectations, accounting for 73% of our full-year forecast, but fell short of the consensus estimate at 67%.

Quarterly. MAHB recorded a revenue growth of +20.0%yoy, driven by a recovery in passenger traffic, which reached 98% of pre-pandemic levels in 3QFY24 (Malaysia: 92%, ISG: 112%), compared to 88% in 3QFY23. Its commercial and retail revitalisation initiatives have boosted the operational occupancy rate to 84% in 9MFY24 (9MFY23: 63%) and are on track to approach the targeted 86% by end-FY24. Additionally, upgrades to Eraman's duty-free offerings have raised average spending per ticket to RM325 in 9MFY24 (FY23: RM314), up from RM233 in FY19.

Overall, core PAT increased by +12.8%yoy. Sequentially, revenue grew by +11.1%qoq, driven by a +7.3%qoq increase in overall passenger traffic, while core PAT dropped -22.1%qoq due to lower tax credits.

Outlook. Year-to-date, 13 new airlines have started services to Malaysia, exceeding the target of 12 for the year. An additional two, JiangXi Air and HK Express, are set to commence in 4QFY24. The commencement of British Airways' operations has been delayed to Apr-25, from the initially planned Nov-24, due to aircraft unavailability. As for existing airlines, 52 new services have been launched to date. On the other hand, despite China's economic slowdown, passenger movements from China have shown strong growth, surpassing 2019 levels by 23% in Sep-24. In its Turkish operations, Pegasus Airlines and Turkish Airlines' Ajet, are expanding their networks with new aircraft, adding 14 and 5 international routes, respectively, to date.

Accept offer. Earnings estimates remain unchanged, and our DCF- derived fair value is maintained at RM9.32 (WACC: 11%, g: 1%). We continue to recommend investors accept the buyout offer at RM11.00, which reflects an +18% premium to our fair value.

Source: MIDF Research - 27 Nov 2024