Maintain BUY call with higher TP of MYR7.17 (+2%)
Malaysian (MY) international passenger (pax) traffic is starting to improve.
Curiously, Turkish (TR) domestic pax traffic is recovering slower than the
international one. Yet, we are not complaining as the latter is much more
profitable than the former. We narrow our FY22E net loss by 23%. While
our FY23E and FY24E net profit are little changed for now, there could be
upside from a new Operating Agreement which is due soon. Tweak DCFbased TP to MYR7.17 from MYR7.00. Maintain BUY.
MY international pax traffic starting to recover
4M22 MY total pax traffic hit 32% of 4M19 levels (domestic: 57% of 4M19
levels, international: 9% of 4M19 levels). While the 4M22 MY international
pax traffic appears weak, Apr 2022 MY international pax traffic improved
to 14% of Apr 2019 levels as Malaysia reopened its borders on 1 Apr 2022.
With Apr 2022 being the fasting month and Malaysia axing pre- and postflight COVID-19 testing on 1 May 2022, May 2022 MY international pax
traffic ought to be even better.
TR pax traffic mix positive for group earnings
4M22 TR total pax traffic hit 77% of 4M19 levels (domestic: 63% of 4M19
levels, international: 100% of 4M19 levels). Curiously, TR international pax
traffic is recovering faster than the domestic one. MAHB explained that its
TR partner airlines prefer to use slots for international flights as there is
more demand for them than domestic ones. In any case, this mix benefits
MAHB greatly as the TR international PSC is 5-6x that of the domestic one.
Narrow FY22E net loss by 23%
As a result of the aforementioned, we:- (i) raise FY22E MY domestic pax
traffic to 60% of FY19A levels (45% previously); (ii) maintain FY22E MY
international pax traffic at 20% of FY19A levels pending May 2022 figures;
(iii) cut FY22E TR domestic pax traffic to 75% of FY19A levels (100%
previously); and (iv) raise FY22E TR international pax traffic to 100% of
FY19A levels (75% previously). Net impact of the above is to narrow our
FY22E net loss by 23%.