Thursday, August 6

‘Budget 2020 uneventful for MAHB’s investors’


KUCHING: Analysts were of the opinion that Budget 2020 was uneventful for Malaysia Airports Holdings Bhd’s (MAHB) investors, but note that Visit Malaysia 2020 (VMY2020) should lift the group’s passenger traffic.

Affin Hwang Investment Bank Bhd (AffinHwang Capital) recapped in its transport and logistics sector update on Budget 2020 announced last Friday, with the government planning to upgrade the Sultan Azlan Shah Airport in Ipoh, including an extension of its runway.

“Towards this, the government will invite proposals on a public-private partnership basis to realise this investment,” the research firm said yesterday.

“We are rather surprised with this proposal, as the Ipoh Airport has yet to reach its full capacity and is loss-making.

“As such, we do not expect the proposal to have a material impact to MAHB’s profitability.

“Overall, Budget 2020 was an uneventful one for MAHB’s investors.”

AffinHwang Capital noted that instead, investors are watching out for the developments in Turkey (possible sanctions by the US) and the final details of the Regulatory Asset Base (RAB) framework, which is set to be implemented on Jan 1, 2020.

Meanwhile, the research firm highlighted that VMY2020 should lift MAHB’s passenger traffic, but note that this has been priced in.

This comes as previous VMY campaigns saw seven to 54 per cent year on year y-o-y increases in tourist arrivals during the campaign period.

“Malaysia has welcomed 13.4 million tourists in the first six months of 2019 (6M19), up 4.9 per cent y-o-y. Annualising the 4.9 per cent growth rate, Malaysia may see 27 million tourist arrivals in 2019 (2018A: 25.8 million).

“Taking into consideration the VMY2020 campaign and weak ringgit (relative to the US dollar and some Asean peers), the 30 million tourist arrivals target looks achievable.”

“The higher tourist arrivals figure in 2020 should help lift MAHB’s passenger traffic. This positive is, however, largely priced-in. The Government first mentioned VMY2020 in 2017, and we have since pencilled in 106 million passenger traffic (for MAHB’s Malaysia operation) in 2020E, up seven per cent from 99.1 million in 2018.”