KUALA LUMPUR: RHB Research believes the worst is over for the aviation industry and expects more prominent recoveries for Malaysia Airports Holdings Bhd’s (MAHB) domestic operations in the coming quarters as airlines continue to resume and increase capacities and the gradual return of Chinese travellers.In a research note, it said China’s passenger traffic recovery rate in March was only at 19 per cent of 2019’s levels, and the group is expecting to achieve a more than 60 per cent recovery rate from the East Asian nation by end-2023.“MAHB has returned to the black, improving tremendously as it posted a core net profit of RM79 million in the first quarter of 2023, more than 100 per cent quarter-on-quarter and year-on-year, despite a seasonally weaker quarter for air travel due to the off-peak season, especially for its Turkey operations,” it added.
Meanwhile, RHB Research said the transport sector’s sentiment has been lukewarm since the second half of 2022 with the ongoing inflationary pressures and sharp correction in freight rates.
“We continue to favour service providers within the logistics and transportation industries – particularly third-party logistics (3PL) players with diversified portfolios that remain shielded from the ongoing weakening freight environment.“We added MAHB as one of our top Picks, riding on the aviation industry recovery trend moving forward,” it added.
RHB Research said freight forwarders and third-party logistics players such as Tasco Bhd and FM Global Logistics Bhd (FM) broadly met expectations despite a challenging operating environment, with the former ending its 2023 financial year with another round of record-breaking annual earnings.
“This met our and street’s estimates despite lingering concerns over freight forwarders’ earnings visibilities. We note that April and May saw lower-than-expected volumes being handled, owing to the Aidil Fitri festivities in April and the long Golden Week holidays in Japan and China in May,” it added.
Despite an uptick in shipment volumes for June and July, RHB Research said Tasco’s management team turned cautious about the company’s growth momentum.
“Nevertheless, its diversified clientele (which provides a sustainable earnings base), coupled with the integrated logistics services tax incentives, could offer a buffer against sector headwinds,” it added.
Reference: https://www.dailyexpress.com.my/news/215019/worst-is-over-for-aviation-industry-rhb/