AMINVESTMENT Bank maintained its call to buy on Malaysia Airports Holdings Bhd (MAHB) with a sustained forecast and fair value of RM6.6.
The call is based on 22x FY22F EPS at a 40% discount to the FY22F P/E of 36x of its peer, Airports of Thailand (AoT), to reflect Malaysia’s smaller tourism market versus that of Thailand.
This is coupled with a higher operating risk of MAHB’s Sabiha Gokcan International Airport (ISG) in Istanbul, Turkey.
In its second quarter ended June 30, 2020 (2Q20), MAHB had an abysmal 78.4% decline in revenue to RM272 mil from RM1.26 bil in 2Q19 with a net loss of -RM91 mil against last year’s RM160 mil earnings.
However, it is believed that air travel will gradually return to its growth path post-pandemic, with ample support from stakeholders.
“Given its strategic position in the economy and its dominance in the local airport segment as well as its significant market share in Turkey, we believe MAHB warrants stronger support from various stakeholders that should help to tide it through the pandemic and current downturn in the air travel market,” AmInvestment Bank said in a Sept 4, 2020 note.
Additionally, MAHB recently introduced a new airport retail rental model and relief package as part of its efforts in retaining and attracting business partners under its ongoing commercial reset strategy.
Among the initiatives include the restructuring of rental payment, rental rebates of up to 30% for tenants in the ongoing airport commercial reset programme, as well as a temporary rebate of up to 50% for SMEs for six months.
“This will translate into dents of RM45 mil (from the 30% rental rebates) and RM22 mil (from the temporary 50% rental rebates) to MAHB’s budget, which makes up less than 3% of our FY20F revenue assumption,” AmInvestment added.
“We maintain our forecasts as we have already assumed certain rebates to its tenants, in line with the practice in the industry during the pandemic,” it said.
At 11.11 am today, MAHB’s share price dropped 1.53% to RM5.14 with a market capitalisation of 8.53 bil. – Sept 4, 2020
