KUALA LUMPUR: RHB Research anticipates that Malaysia Airports Holding Bhd (MAHB) will experience minimal-to-no impact on the group's earnings.
"While resolving aeronautical charges is crucial, MAHB's potential extends beyond that. We think the ongoing resurgence in commercial rentals, the tourism upswing, and potential operations from regulatory changes represent under-appreciated catalysts (that have) yet to be fully assimilated," it said.
The firm highlighted in a note today that MAHB has additional potential, emphasising the importance of resolving aeronautical charges.
RHB said that the essential components of the operating agreement (OA), covering development capital expenditure, expansion planning, and benchmark passenger service charge (PSC), remain unaltered.
It said that while China has been regarded as the present key laggard, the visa-free facility for citizens from China and India should serve as a compelling catalyst in 2024, stimulating Malaysia's international tourism numbers.
The firm said the important downside risks to note include potential extended delays in initiating regulatory frameworks and the possibility of passenger volumes, PSC, and parking and landing charges falling below anticipated levels.
"As reported, the delays may stem from disagreements over standardising the PSCs between Kuala Lumpur International Airport's Terminals 1 and 2.
Regardless, both frameworks are slated for conclusion by February 2024 at the latest.
"According to our sensitivity analysis, a 10 per cent decrease in Malaysia's international passenger volumes would result in 7.0 per cent, 19.6 per cent, and 6.0 per cent drops to our FY24F earnings before interest, taxes, depreciation, and amortisation (EBITDA), core profit after taxation and minority interests (PATAMI), and target price.
"Pending conclusive information, we conducted a scenario analysis to anticipate potential outcomes. Our bear case scenario presents a minimal downside risk, with less than a 1.0 per cent impact on FY24F EBITDA, core PATAMI, and TP, while our bullish scenario suggests a rewarding upside.
"We also have yet to factor in the proposed increment of parking and landing charges, which will be unveiled in the upcoming third paper.
The firm maintained its 'buy' call on MAHB with a target price of RM8.66 (16 per cent upside).