MALAYSIA Airports Holdings Bhd saw a month-on-month (mom) recovery of 219% in domestic travelers, but TA Securities adopted a more conservative stance, with the assumption that total passenger movements for 2020 will contract further than expected.
“It is worth mentioning the strong recovery of over 200% mom which was led by steady recovery in domestic traffic, which was supported by seasonal factors such as Eid Al Adha and school holidays,” said TA Securities analyst Tan Kam Meng.
He noted that the domestic sector recorded a 219% surge in passenger movements mom to 1.2 million, while the international sector recorded an 87.5% surge in passenger movements mom to 91,000 in July 2020.
However, the analyst is adopting a more conservative stance, with the assumption that Malaysia’s international borders will remain closed for leisure travelling for the rest of 2020.
“Specifically, we now assume 2020 total passenger movements to contract by 60% year-on-year (yoy) compared to the previous assumption of a 39% contraction.”
“In terms of passenger mix, we now assume the split between international and domestic to be 25%:75% compared to 45%:55% previously. Correspondingly, we project FY20 losses to surge to RM607 mil compared to a RM229 mil loss previously,” said Tan.
For MAHB’s Istanbul Sabiha Gökçen International Airport, a total passenger movement of 1.2 million was recorded in July, made up of 258,000 international and 968,000 domestic passenger movements.
“It was a significant contraction compared to 3.4 million in the same period last year. Cumulatively, 7M20 total passenger movements declined by 55.9% to 8.9 million.”
“Mom, the 134% surge in movements was underpinned by the resumption of operations for foreign airlines, recovery in flight frequencies and recommencement of several routes,” said Tan.
The analyst also noted that travel restrictions remain broadly intact, with the resurgent Covid-19 cases in Hong Kong, Melbourne, Tokyo, and South Korea, as well as the record cases in the US, Brazil, and India indicating that travelling to these countries would be restricted for a long period of time.
“However, the border between Malaysia and Singapore had reopened on Aug 10 for residents and business travellers. At this moment, travel bans are still in place in many parts of the world,” said Tan.
TA Securities maintains a buy call on MAHB, as the earnings weakness caused by Covid-19 is temporary, and has not fundamentally changed MAHB’s concession earnings, which would stretch until 2069.
At the end of the morning’s trading, MAHB’s shares were last done at RM5.10, up 12 sen, with 1.27 million shares traded. – Aug 12, 2020
