PETALING JAYA: Following an exceptional performance in 2023, Malaysia Airports Holdings Bhd ’s (MAHB) earnings are set to grow further in 2024, underpinned by the imminent recovery of passenger throughput in both Malaysia and Turkiye, as well as improvements in its commercial and retail operations.
UOB Kay Hian (UOBKH) Research said the finalisation of the revision in airport charges and the new operating agreement are also expected to be concluded in the coming months.
MAHB ended 2023 with a firm footing with the group-wide passenger throughput growing by 42.5% year-on-year (y-o-y) to 119.5 million passengers.
“This is 2.3% higher than our traffic projections for 2023, mainly stemming from the stronger-than-expected performance from the Sabiha Gokcen International Airport or SGIA.
“Note that the full-year 2023 traffic also implies an impressive recovery of 84.6% compared to 2019 levels,” said the research firm.
UOBKH Research said passenger traffic should continue the upward trajectory in 2024, backed by resilient air travel demand coupled with airlines’ higher flight capacity.
“We project traffic at Malaysia airports to further rise 19% y-o-y to 97.2 million passengers in 2024, reaching 92% of pre-pandemic levels.”
On the upcoming fourth quarter of financial year 2023 (4Q23) results, UOBKH Research said it expects MAHB to deliver resilient earnings of RM130mil to RM140mil in 4Q23 despite seasonally lower passenger traffic in the quarter.
“We also believe the retail and commercial operations would post higher sales anchored by higher occupancy rate and better footfalls. This should help MAHB to uplift full-year 2023 earnings to RM460mil, translating to a 146% y-o-y increase compared to RM187mil in 2022.”
Although slower than expected, the research firm is of the view that the return of Chinese tourists, which accounted for 11% to 12% of MAHB’s passenger throughput back in 2019, is a matter of time.
The recent resolution of the controversial aerotrain issues also bodes well for MAHB, as it would help to improve passengers’ travelling experience, despite having to bear a 15% increase in the contract value for all remaining works.
The first of the two aerotrains is scheduled to be operational by July 2024, followed by the delivery of the second one as well as the commencement of the full aerotrain services by March 2025.
“We also understand that the deferred payment mode has now been shelved, which means MAHB’s cash capital expenditure requirement for the aerotrain replacement project would be higher, albeit still manageable.”
Under the previous contract which came with a total cost of RM743mil and a deferred payment model, MAHB was required to pay only an upfront payment of RM100mil-RM150mil with the RM350mil construction cost being paid on a staggered basis across six years upon the original project completion in late-2025 or early-2026.
Meanwhile, the remaining RM200mil in maintenance costs was to be paid over a 10-year period.
“We believe MAHB’s sturdy balance sheet would be sufficient to stomach its near-term expansion plans,” it added.