DEVELOPMENT

• The closing date for accepting the conditional voluntary take-over offer by Gateway Development Alliance Sdn. Bhd., Pantai Panorama Sdn. Bhd., Kwasa Aktif Sdn. Bhd. and GIP Aurea Pte. Ltd. (collectively referred to as the "Joint Offerors") has been extended from Wednesday, 8 January 2025, to Friday, 17 January 2025.
• All other aspects of the offer, as detailed in the offer document - including the offer price of RM11.00 per share and the acceptance condition requiring 90% of the total issues of MAHB shares - remain unchanged.
• As of January 6, 2025, the Joint Offerors and Joint Ultimate Offerors had accumulated a total of 1.17b MAHB shares, accounting for 70.08% of the issued shares. An additional 94.3m shares, representing another 5.65% of the total, are currently awaiting the submission of the necessary acceptance documents.
• It was further stated if the acceptance condition is revised to a lower threshold, the Joint Offerors and Joint Ultimate Offerors will take the necessary measures to facilitate the delisting of MAHB.

OUR VIEW

• We continue to recommend that investors accept the offer, as the RM11.00 offer price reflects an +18% premium over our DCF-derived fair value of RM9.32 (WACC: 11%, g: 1%). It also offers a substantial premium of +125% over the latest unaudited net asset per share of RM4.89 as of end-3QFY24. At present, the stock is valued at 7.1x FY24F EV/EBITDA, based on its last closing price.
• MAHB is expected to undertake substantial capital expenditure in the coming years for airport expansion and development as it gears up to meet growing passenger traffic demand. This may lead to a longer gestation period for earnings, coupled with ongoing considerations around the regulatory framework. As of now, details regarding the regulatory framework for the second regulatory period (RP2), beginning 1 January 2027, including the transition to a cost-based approach for determining aviation service charges, have not yet been outlined.
• On passenger traffic recovery, based on the latest figures, Nov-24 showed significant improvements, with both Malaysia and Turkey operations achieving double-digit growth compared to the same period last year, despite the typically low season. Total passenger movements reached 11.2m, or 96.7% of pre-pandemic levels, highlighting a strong recovery in travel demand.
• For its Malaysia operations, which contribute at least 70% to its PAT, we expect a preliminary full recovery in passenger traffic this year, with projected growth of +4.0% compared to CY19 levels. However, this is subject to key downside risks, including (1) delays in AirAsia Malaysia's fleet reactivation, (2) potential disruptions in aircraft deliveries, and (3) ongoing supply chain challenges.

Source: MIDF Research - 7 Jan 2025