In its research note, the investment bank said the expected improvement from the international segment will boost margins, alongside the company’s ongoing commercial reset programme to accelerate non-aeronautical contributions to even stronger than pre-pandemic levels.

“The finalisation of the operating agreement and regulated asset base will strengthen MAHB’s position in airport development with a relatively attractive allowable return,” it added.

Furthermore, the investment bank said Istanbul Sabiha Gokcen International Airport’s recovery was stronger than expected as it returned to the black in 2022 and is expected to record stronger earnings going forward.

HLIB said MAHB is focusing to accelerate the recovery of the international travel segment, both Asean and non-Asean, in 2023 as more international travel requirements are being relaxed.

“Based on the latest January-February statistics, passenger movement has recovered to 80% of pre-pandemic levels for the domestic segment, 70% for Asean and 55% for non-Asean.

“We believe there is strong potential upside to the international segment as we anticipate continued recovery into 2023-24, driven mainly by AirAsia Group,” it added.

During the pandemic, MAHB has also taken the opportunity to implement its commercial reset programme to improve airport traveller experience.

HLIB said the programme improves the structure of the rental business model, reconfigures the mix of shops and increases overall retail space by 10% while MAHB’s wholly owned retail arm Eraman’s operations are also being realigned to enhance its average income per passenger.

“We noticed there was an improvement in patrons at the restaurants and food garden area in Kuala Lumpur International Airport during our recent site visit. We expect a stronger contribution from the non-aeronautical segment as air travel continues its recovery traction in 2023-2024 compared to 2019,” it added.