KUALA LUMPUR: Hong Leong Investment Bank Bhd's (HLIB) research has raised Malaysia Airports Holdings Bhd's (MAHB) earnings forecasts for financial year 2024 and 2025 after the company posted record profits in the first quarter ended Mar 31, 2024 (Q1FY24).
Forecasts were raised by 31.3 per cent and 51.2 per cent respectively for FY24 and FY25, with FY26 earnings introduced at RM1.3 billion.
MAHB's results for the first quarter of financial year 2024 (1QFY24) came in above HLIB research and consensus' expectations, driven by improved traffic and lower cost structure.
The research house said MAHB's operations in Malaysia and Istanbul Sabiha Gokcen Airport (ISGA) are expected to maintain its growth trajectory in the coming quarters, in line with the increasing air travel traffic.
"We expect continued improvement in air traffic as airlines continue to expand their fleets and capacities as air travel demand remained robust, due to the relaxing of visa requirement China and India sectors (effective Dec 1, 2023)," HLIB research said.
"The improving traffic also contributed to higher commercial and retail segment on higher traffic flow and average spending (achieved new high RM338 per pax in 1QFY24)," it commented on MAHB's operation in Malaysia.
Despite the seasonally weaker quarter at ISGA, HLIB said it continued to record stronger earnings due to strong passenger growth, surpassing the pre-pandemic 2019 level, with improved international mix.
"We expect MAHB to engage the Turkish Authority for terminal capacity expansion (currently 41 mpta), after achieving 37.6 million in 2023, potentially allowing for further extension of concession, allowing for higher valuation," it said.
HLIB added that the recent conclusion of operating agreement (OA), which lowered user fees, and First Regulatory Period (RP1) have strengthened MAHB's position with favourable earnings prospects.
HLIB however maintained its call for MAHB shareholders to cash-in their investments and accept the RM11 offer for their shares from a four-member consortium led by its major shareholder Khazanah Nasional Bhd.
"While we believe MAHB has strong fundamentals with core value above RM11, we note the potential long gestation period. Hence, we advise shareholders wishing to cash-in their investments in MAHB to accept the offer of RM11 per share," it said.
On May 15, 2024, a consortium led by Khazanah and the Employees Provident Fund launched a pre-conditional voluntary offer to acquire all the shares in MAHB at RM11.00 per share.