RHB upgrades MAHB to ‘buy’, ups target price to RM6.65

KUALA LUMPUR (Feb 16): RHB Investment Bank Research has raised its target price for Malaysia Airports Holdings Bhd (MAHB) to RM6.65 (from 4.90) and upgraded the stock to a “buy”, as it estimates MAHB’s FY22 forecast earnings to increase by 36% to RM304 million.

“We have assumed higher passenger volume for FY22 for both the company’s Malaysia and Turkey operations. We make no change to FY20-21F net profit,” said RHB’s analyst Alan Lim, adding that he forecasts MAHB’s passenger volume to improve gradually over the next 12 months as Malaysia’s National Covid-19 Immunisation Plan is set to kick-off at the end of February.

He added in a report today that he expects “weak 4Q20 earnings” followed by a turnaround in 4Q21 and FY22.

“We expect MAHB to book a net loss of RM439 million for 4Q20. Having said that, we believe that investors should look beyond the near-term earnings weakness, due to the expected turnaround in 4Q21 and FY22,” Lim noted.

According to Lim, Malaysian airports were impacted by the second movement control order (MCO 2.0), which took effect on Jan 13 and caused inter-state travel restrictions to be renewed while international borders remain closed.

Therefore, MAHB’s passenger traffic decreased by 83% year-on-year (y-o-y) in January to 2.07 million persons but the decline was not a surprise when compared with January 2020 (prior to the pandemic).

“We expect passenger traffic growth to turn positive y-o-y from 2Q21 onwards, assuming that the country’s lockdown-related restrictions end,” said Lim.

In terms of MAHB’s Turkish business, passenger volume at Istanbul Sabiha Gokcen International Airport was affected by restrictions related to curfews and the suspension of flights from the UK, South Africa, and Denmark.

Overall, Lim anticipates that MAHB should benefit from the expected significant decline in Covid-19 cases both globally and domestically, as the vaccine effect becomes prevalent in the next 12 months.

He also expects the launch of the vaccine programme in Malaysia to be positive for MAHB’s passenger volume, as confidence in travel gradually increases.

This morning, Prime Minister Tan Sri Muhyiddin Yassin said the first batch of Pfizer-BioNTech vaccines will arrive on Feb 21 and the National Covid-19 Vaccination Programme will begin on Feb 26.

At the point of writing, MAHB’s stock was up 0.72% or four sen at RM5.58.

Source: TheEdgeMarkets