‘MAHB move to explore options in ISGA stake sale positive’

KUALA LUMPUR: Analysts view Malaysia Airports Holdings Bhd (MAHB) move to explore options in monetising its investment in Istanbul Gokcen International Airport (ISGA) via a partial divestment of a minority stake as a positive move.

The asset’s estimated value is at €735 million (RM3.5 billion).

The ISGA, which is 100 per cent-owned by MAHB, has been showing positive signs of traffic recovery and is expected to turnaround this year, according to Hong Leong Investment Bank Research (HLIB Research).

ISGA is projected to record strong traffic growth. It is currently under an expansion plan to handle 41 million from 33 million passengers by the middle of this year, in view of the current high utilisation rate of more than 90 per cent of terminal capacity.

The Turkey-based operations registered the strongest passenger grow th la st month, the 10th consecutive yearon-year growth in 2017 financial year (FY2017), at an allyear high of 16.2 per cent.

“Year-to-date, Turkey performed well, registering a growth of +5.6 per cent compared with 4.8 per cent previously.

“We are positive on the recovery prospects in Turkey, from the negative streak of events which shook Turkey since early FY16. We are targeting double-digit growth of 10 per cent in FY18,” said Kenanga Investment in a note.

On the domestic front, MIDF Amanah Investment Bank Bhd Research said the upbeat demand for international air travel last year was primarily due to the relaxation of visa rules for tourists from China and India.

“Considering that the visa-free programme will continue this year, we believe the international traffic numbers will see bigger contribution from China, India and Southeast Asia,” an analyst at MIDF told NST Business yesterday.

Passengers from the China, India and the Southeast Asia region make up 75 per cent of MAHB’s international traffic.

Admitting that the figures are rather conservative, the research house is imputing a passenger growth rate of 4.0 per cent for MAHB (excluding ISGA) in its valuation assumption, taking into account MAHB’s forecast of 6.5 per cent.

“While the growth rate in passenger traffic is forecast to be lower compared with last year, we consider it to be healthy as we expect passenger traffic to be largely driven by higher-value international passengers,” said MIDF.

This would lend support to stable passenger service charge collection, which makes up an average of ~63.0 per cent of aeronautical revenue.

“We expect passenger traffic to hover around 8-8.5 million passengers monthly.

“Coming into 2020, we foresee the number to be much stronger, stemming from the Visit Malaysia 2020 campaign,” said an analyst.

It was reported that MAHB will be able to see annual passenger traffic numbers at its local airports surpassing 100 million within two years, with a forecast growth of 4.0-6.0 per cent this year after a 7.8 per cent expansion to 127.9 million passengers, including at its overseas airports last year. Zarina Zakariah