THE runway is clear with airports operator Malaysia Airports Holdings Bhd (MAHB) preparing for what could be its most transformative flight.
With Gateway Development Alliance (GDA) securing 84.1% of its shares and extending the offer period to Jan 17, the company may just be steps away from delisting. For shareholders, this isn’t just about a payout – it’s about propelling Malaysia’s aviation industry to new heights.
The RM11/share offered by the GDA consortium is too compelling to ignore. It represents a 49.5% premium over year-to-date trading prices, making it the highest price MAHB has ever achieved.
Moreover, the valuation implies a price-to-earnings (P/E) ratio of 37.7 times, far surpassing historical levels. In fact, all 14 equity research analysts covering MAHB have target prices at or below RM11 with most explicitly recommending shareholders accept the offer.
In Malaysia, extending the deadlines for deals of such magnitude is not uncommon. For instance, the Armed Forces Fund Board (LTAT) successfully extended the closing date for its RM1.55/share offer to take Boustead Plantations Bhd private which concluded on Jan 5, 2024 – two weeks from the original closing date.
Similarly, Sime Darby Bhd extended its RM5/share offer for UMW Holdings Bhd to Jan 31, 2024 (from Jan 17 that year), thus ensuring a smooth acquisition process. Such extensions allow more time to ensure broad participation and successful outcomes.
In fact, an estimated 28 companies were successfully delisted over the past 10 years in Malaysia after the deadlines were extended.
Cashing out
For shareholders, the financials speak volumes. MAHB’s RM11/share offer dwarfs the company’s stagnant dividend history. In 2024, its dividend yield was a paltry 1.0%, well below both the Bursa Malaysia FBM KLCI Index and the DJ Airports Index.
Over the last decade, cumulative dividends amounted to just 82 sen/share – a stark contrast to the RM11/share now on the table. This is a rare opportunity for shareholders to realise substantial value and exit a company weighed down by regulatory constraints.
Operationally, MAHB’s challenges have been mounting. Once the crown jewel of Malaysian aviation, KLIA was ranked second globally in 2001 but has since plunged to 71st place in 2024. Aging infrastructure, unresolved issues like the Aerotrain failure and declining passenger satisfaction have eroded its competitive edge.
The consortium backing the deal – comprising Khazanah Nasional Bhd, the Employees Provident Fund (EPF), the Abu Dhabi Investment Authority (ADIA) and Global Infrastructure Partners (GIP) – offers a clear path forward.
With a commitment to injecting fresh capital and leveraging global expertise, the consortium plans to modernise facilities and enhance passenger experiences. GIP’s proven track record with international airports ensures that MAHB will benefit from best-in-class practices and regain its regional competitiveness.
Privatisation eliminates the constraints of quarterly earnings pressures and regulatory caps on returns, allowing GDA to focus on long-term strategies.
As a listed entity, MAHB’s returns are capped at 11.4% of its regulated asset base, limiting reinvestment in critical upgrades. Under private ownership, the company can embark on transformative projects, improving infrastructure, service quality and overall efficiency.
No need to hesitate
This deal also offers an opportunity to revitalise MAHB’s corporate culture. With new leadership and a shift to a customer-centric approach, the company can better serve passengers and airlines, reversing years of complacency.
Critics may argue that privatisation prioritises profit over public interest. However, regulatory safeguards remain intact, and the government retains special rights to ensure public accountability.
Additionally, the consortium’s success hinges on public confidence – a rejuvenated MAHB will not only benefit shareholders but also spur growth in tourism, trade and the broader economy.
Meanwhile, Opposition MPs are pushing for the Public Accounts Committee (PAC) to investigate the MAHB deal.
This sets a dangerous precedent for the investment landscape. Who will want to invest in Malaysia in the future if every major transaction risks being politicised and subjected to such scrutiny?
For shareholders still wavering, waiting for a higher offer is a risky bet. The RM11/share price is a substantial premium and reflects fair market value, especially given MAHB’s persistent underperformance.
With the Jan 17 deadline fast approaching, shareholders should seize this opportunity. This isn’t just a deal – it’s a chance to re-imagine Malaysia’s aviation landscape and position MAHB as a leader in the ASEAN region.
The path forward is clear and the time to act is now. – Jan 15, 2025
Editor’s Note: At the close of today’s (Jan 15) mid-day trading, MAHB was down 2 sen or 0.18% to RM10.92 with 625,800 shares traded, thus valuing the airports operator at RM18.22 bil.
