FY20 a tough mess for MAHB

KUALA LUMPUR: Malaysia Airports Holdings Berhad (MAHB) recorded a core loss of RM681.5 million in its fourth quarter of financial year 2020 (4QFY20) on the back of sequentially lower revenue at RM263.6 million.

Cumulatively, its FY20 core losses widened to RM1.17 billion, represewnting a drop of 361.1 per cent year on year (y-o-y).

MIDf Amanah Investment Bank Bhd (MIDF Research) deemed this result to be below our expectation as the loss deviate by 122.9 per cent of its estimates and 71.9 per cent of consensus expectation full year FY20 estimate.

“2020 was a brutal year for aviation players. MAHB’s Malaysian aeronautical segment recorded a revenue of RM518.9 million whereas the Istanbul Sabiha Gocken aeronautical segment saw smaller revenue contraction at 52 per cent y-o-y at RM367.4 million,” it said in its report.

“For its Malaysian operations, passenger service charge (PSC) as well as landing and parking segments both saw a decline in revenue of 78.9 and 66.5 per cent y-o-yrespectively. Meanwhile, PSC for Turkey operation also showed a similar trend of contraction at 58 per cent y-o-y.”

Overall for the group in FY20, international passenger movement dropped by 78 per cent y-o-y to 14.8 million whereas domestic passenger movement dropped by 61.8 per cent y-o-y to 28.1 million.

Malaysian passenger movements saw higher contraction compared to Turkey as the former adopted a more stringent movement control orders and border controls to curb the pandemic.

As a result, Malaysia saw a steeper drop in total passenger movement at 75 per cent.

“Meanwhile, its nonaeronautical segment saw a decline for both Malaysia and Turkey operation at RM619.3 million and RM176.9 million respectively,” MIDF Research continued. “This was despite a multi-fold improvement in the quarterly retail sales in both countries last quarter.

“The decline was primarily driven by the lower rental and royalty collections which outweigh the positive growth in retail sales.”

Despite the erosion on its top line, the group managed to prevent further bleeding from its successful cost containment efforts. During the year, MAHB successfully achieved total cost reduction of -36.3 per centyoy with core operating costs down by -26.1 per centyoy.

This is in line with contraction of passenger movements, and further internal cost rationalization initiatives to reduce staff costs, utilities and maintenance, among others.

Meanwhile, MIDF Research said negotiations for the operating agreement between MAHB and Government of Malaysia are expected to be finalised and announced by the end of 2QCY21.

“This will give room for fresh funds to be injected via joint ventures with new stakeholders for airports development in Malaysia,” it added.

“Also, the Regulated Asset Base (RAB) framework is scheduled to come into effect in CY21. The key difference will be that the funding of airports capital expenditures will fall onto MAHB instead of the Government and is linked to the fees charged on airport users.”