This article first appeared in The Edge Malaysia Weekly on September 16, 2024 - September 22, 2024

The airport operator’s share price shot up to record high of RM10.50 on Aug 30, thanks to the privatisation bid launched by a consortium led by its major shareholder Khazanah Nasional Bhd.

The consortium is offering RM11 per share, or RM12.3 billion in total, to buy out Malaysia Airports Holdings Bhd (MAHB) (KL:AIRPORT), which manages 39 airports nationwide, including five international airports and 17 STOLports. The group also owns and manages one international airport in Istanbul, Turkiye.

Should the takeover exercise materialise, the consortium will wholly own MAHB. Khazanah will be the single largest shareholder with a 40% stake in the consortium.

The Employees Provident Fund and GIP Aurea Pte Ltd will each hold a 30% stake. GIP Aurea is a joint venture between Global Infrastructure Partners (GIP) and Abu Dhabi Investment Authority (ADIA). GIP will have an effective 25% stake in MAHB via its 83.3% stake in the joint venture with ADIA. ADIA will have a 5% effective stake.

While MAHB has had the limelight cast on it for all the wrong reasons because of the malfunction of the aerotrain at Kuala Lumpur International Airport, the takeover offer provided a big boost to its share price, which soared by nearly 38% within four months from early December 2023, lifting it above the RM9 level.

During the period under review, between March 31, 2021 and March 31, 2024, its share price has climbed 62% from RM6.143 to RM9.96.

On top of that, MAHB resumed its dividend payment in the financial year ended Dec 31, 2022 (FY2022) and FY2023, given the strong earnings recovery post-pandemic. Its dividend policy is minimum 50% of the profit attributable to shareholders.

The group declared a dividend per share of 10.80 sen for FY2023, or RM180.2 million in total. It also paid a DPS of 3.91 sen, or RM64.7 million, for FY2022 — the first dividend payment since FY2019.

Given that, MAHB’s shareholder return three-year compound annual growth rate for the period of March 31,2021 to March 31, 2024 was 17.5% — the highest among listed companies with a market capitalisation above RM1 billion in the Transportation and Logistics sector. Hence, MAHB was recognised at The Edge Billion Ringgit Club (BRC) 2024 awards for the highest returns to shareholders over three years under the Transportation and Logistics sector. This is the fifth BRC award that the airport operator has won over the years.

MAHB is a good proxy to the pent-up demand for holiday and business travel activities. Systemwide, the group’s passenger movements bounced back to 119.5 million in FY2023, up 42% from 83.9 million passengers in FY2022. The figure was barely 36.1 million in FY2021 and 43 million in FY2020. Its record high was 140.6 million in FY2019 before the outbreak of Covid-19.

Systemwide, commercial aircraft movements recovered to 907,573 in FY2023 compared with 745,130 in FY2022 and 412,505 in FY2021. At the peak, MAHB’s aircraft movements were at 1.12 million in 2019.

Consequently, the group returned to the black in FY2022 with a net profit attributed to shareholders of RM187.2 million compared to a net loss of RM766.4 million in FY2021 and RM1.116 billion in FY2021.

Revenue in FY2022 came in at RM3.127 billion, nearly double RM1.67 billion in FY2021, after the airport operator slipped into the red for two years in FY2020 and FY2021 due to the Covid-19 pandemic that resulted in the unprecedented closure of international borders.

The growth gained momentum. MAHB posted record high net profit attributable to shareholders of RM543.2 million in FY2023.

Nonetheless, its bumper profit was partly due to a sharp rise in other income and share of profit from associates and joint ventures. In addition, it booked a higher gain on fair value of investment in GMR Hyderabad International Airport Ltd recorded that year.

In 2023, MAHB sold its 11% stake in GMR Hyderabad International Airport Ltd, the operator of the Hyderabad International Airport, to the units of GMR Airports Infrastructure Ltd for US$100 million to unlock its investment in India.

This could be the last award MAHB takes home before the privatisation exercise, which however faces hurdles.

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