KUALA LUMPUR – Maybank Investment Bank Bhd (Maybank IB) remains positive on the Malaysian aviation sector ahead of the 15th general election (GE15) as the polls are expected to “add fuel to the industry’s recovery.”
The research house said it expects GE15 to have a long-term positive impact on passenger traffic and a short-term positive impact on airfares.
“History has taught us that passenger traffic tends to rise during GEs as voters return to their voting constituencies to vote.
“This is especially true for voters whose voting constituencies are across the South China Sea in Sabah and Sarawak.
“There was also growth in airfares during other GEs but they did not last long,” it said in a research note.
GE15 is expected to favour Capital A Bhd more than Malaysia Airports Holdings Bhd (MAHB), it added.
For MAHB, it noted that domestic passenger traffic grew 18% in GE13 and 3% during GE14 in 2018, while Capital A, the operator of AirAsia, saw its Malaysian operation’s passenger traffic rise 11% in both GE13 and GE14.
“We expect GE15 to exhibit similar trends. What intrigues us further is that the rise in passenger traffic in the past appeared to be structural.
“In other words, passenger traffic did not ease post-GEs but stabilised or even continued growing,” the research firm noted.
However, it reckons that GE15’s impact on the sector might be less potent this time around, as the voter turnout might not be as high as GE13 (80%) and GE14 (76%) as the states led by Pakatan Harapan and Islamist party PAS will not be dissolving their assemblies.
Moreover, it said Sabah and Sarawak had already held their state elections in September 2020 and December 2021 respectively and voters might also be dissuaded from flying to their voting constituencies due to the current high airfares.
“Nonetheless, we maintain our ‘buy’ calls and target prices for MAHB and Capital A at RM7.25 and 84 sen respectively, and retain our positive view on the Malaysian aviation sector,” it added. – Bernama, October 17, 2022
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