Kuala Lumpur: Higher tourist numbers from India could serve to prop up arrivals into Malaysia Airports Holdings Bhd (MAHB)'s airports should there be no coronavirus outbreak in Malaysia.
In a note to investors this morning, MIDF Amanah Investment Bank Bhd Research said assuming there are no cases of the virus in Malaysia, Indian tourists — whose 15-day visa-free travel has been extended to the whole of 2020 — could offset a decline in Chinese tourist arrivals.
The research house noted tourist arrivals from India reached approximately 600,000, which is almost comparable to South Korea and 52.2% higher than Japanese tourist arrival numbers.
"Other growth factors would include direct connectivity seen from international airlines flights to locations such as Langkawi. As such, we still believe that MAHB passenger numbers can meet the 110.8 million mark in 2020 at the current juncture, assuming a growth rate of 5.4%. In terms of valuations, MAHB's stock price is trading at a 12-month price-to-earnings ratio (PER) of 24.6 times, less than half of its five-year average (PER) of 63.7 times and at a discount compared to the regional PER of 37.6 times," MIDF noted.
MIDF has maintained its buy call on MAHB with a target price of RM8.98.
The research house noted that following the 2003 SARS outbreak, MAHB's passenger traffic growth in Malaysia slowed to 1.5% year-on-year (y-o-y) — with total international passengers at Kuala Lumpur International Airport (KLIA)'s main terminal travelling to and from China declining 10.7% y-o-y.
24/01/20 Arjuna Chandran Shankar/The Edge Markets
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In a note to investors this morning, MIDF Amanah Investment Bank Bhd Research said assuming there are no cases of the virus in Malaysia, Indian tourists — whose 15-day visa-free travel has been extended to the whole of 2020 — could offset a decline in Chinese tourist arrivals.
The research house noted tourist arrivals from India reached approximately 600,000, which is almost comparable to South Korea and 52.2% higher than Japanese tourist arrival numbers.
"Other growth factors would include direct connectivity seen from international airlines flights to locations such as Langkawi. As such, we still believe that MAHB passenger numbers can meet the 110.8 million mark in 2020 at the current juncture, assuming a growth rate of 5.4%. In terms of valuations, MAHB's stock price is trading at a 12-month price-to-earnings ratio (PER) of 24.6 times, less than half of its five-year average (PER) of 63.7 times and at a discount compared to the regional PER of 37.6 times," MIDF noted.
MIDF has maintained its buy call on MAHB with a target price of RM8.98.
The research house noted that following the 2003 SARS outbreak, MAHB's passenger traffic growth in Malaysia slowed to 1.5% year-on-year (y-o-y) — with total international passengers at Kuala Lumpur International Airport (KLIA)'s main terminal travelling to and from China declining 10.7% y-o-y.
24/01/20 Arjuna Chandran Shankar/The Edge Markets
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