More upside for Malaysia Airports as Firefly resumes Subang-Singapore flights

KUALA LUMPUR: MIDF Research believes that Malaysia Airports Holdings Bhd (MAHB) will maintain its upward trajectory especially in terms of passenger growth amidst the relaxation of visa policies for Chinese and Indian nationals visiting Malaysia.

In its research note issued on Tuesday, it expects MAHB’s efforts in not only attracting more new airlines but also offering increased connectivity to moderate the effects of the departure levy set to be imposed in June 2019 for outgoing international passengers.

“As such, we reiterate our optimism that MAHB passenger numbers will surpass the 100m mark in 2019, while maintaining a relatively conservative growth rate of 3.5%.

“All things considered, we maintain our BUY call on MAHB with a TP of RM9.44 per share as it is a proxy to Malaysia’s inbound/outbound travel industry, being Malaysia’s largest airport operator.

“We opine that its undemanding valuations of a trailing PE ratio of 18.3 times, compared to the average of its regional peers with a PE ratio of nearly 50x presents a good opportunity for investors to accumulate the stock,” it said.

To recap, Malaysia and Singapore ended its aerospace disputes following the withdrawal of Singapore’s Instrument Landing System (ILS) procedures for its Seletar Airport. Meanwhile, Malaysia will indefinitely suspend its permanent Restricted Area (RA) over Pasir Gudang.

As such, Firefly will resume its flights from Subang Airport to Seletar Airport beginning late April 2019.

Firefly’s flights to Singapore were suspended on Dec 1, 2018 as they were remaining matters in relation to Singapore’s plans to move turboprop aircraft operations from Changi Airport to Seletar Airport.

The Kuala Lumpur-Singapore (KUL-SIN) route is the top Asia Pacific international route with more than 30,000 flights from March 2018 to February 2019 according to Official Aviation Guide (OAG).

Based on MAHB’s guidance, Firefly operates around 4,000 flights on an annualized basis (assuming five to six return flights per day at minimum to and from Singapore).
As such, Firefly would be ranked higher than Jetstar Asia in terms of number of flights to and from Singapore but capacity would be much lower as Firefly’s turboprop aircraft can only carry 72 passengers.

Source : TheStar