MAHB’s MOP venture boosts its long-term prospects
KUCHING: Malaysia Airports Holdings Bhd’s ( MAHB) focus on the development of outlet malls in Malaysia, which includes the Mitsui Outlet Park ( MOP), could be of another enhancement to its long-term strategic plan of becoming an airport city, analysts say.
Of note, MOP is a project under MFMA Development Sdn Bhd, a joint venture where MAHB owns 30 per cent and is responsible for the construction of the outlet store buildings and management of lease tenants.
The other shareholder is Mitsui Fudosan Co Ltd which owns 70 per cent of the project. It is located 6km from KL International airport, and the development of MOP will be carried out in three phases.
According to MIDF Amanah Investment Bank Bhd ( MIDF Research), in terms of retail space, MOP will be 18.4 per cent bigger in comparison to its nearest competitor and the current biggest outlet malls, Genting Premium Outlet.
It noted that based on its plan, MOP is expected to offer 250 lettable outlet shops by 2021. According to the management, average rental rate stood at RM19 per square feet (sqf).
“Following MAHB’s venture into outlet malls with Mitsui, we noted that the revenue collection from rental is minimal, about RM3 million from a lease collection.
“While the impact financially is minimal, we believe it enhances the long-term prospect of MAHB. In our opinion, this development will bode well with the overall objective of MAHB’s Runway to Success initiatives which is to build KLIA as a tourist destination itself.
“Following its strategic plan of mix development around the vi-
Following MAHB’s venture into outlet malls with Mitsui, we noted that the revenue collection from rental is minimal, about RM3 million from a lease collection.
cinity, this will enable MAHB to offer a more comprehensive airport experience to both domestic and international passengers,” MIDF Research opined.
On potential visitors and customers at the outlet, the research team noted that the biggest portion of 65 per cent comprises local visitors, while the remaining is foreign.
“On average, spending/ visitors are around RM300 to RM500 per visit. Moving forward, management of Mitsui is targeting to expand the percentage of the foreign visitors to 40 per cent.
“We believe this is possible given the growing trend of visitors from China, attributable to Malaysia visa relaxation programme. It is also important to note that Chinese tourists are ranked as the top biggest spender among tourists in Malaysia, with Taiwanese at second place.
“While the amount spent per customer is not disclosed, we believe that the arrival of foreign tourists is expected to stimulate more demand for outlet products,” MIDF Research commented.
Meanwhile, the research team also highlighted that the mix development around the land area of Malaysia airports would further complement its extended function of becoming an airport city.
“Subsequently, we believe the company is moving in the right direction to provide more functions towards travellers as well as locals who are seeking for convenience,” it added.
All in, MIDF Research said it remains optimistic about MAHB’s prospects.
The research team pegged a ‘buy’ call on the stock.
MIDF Research