MAHB expected to gain from China visa-free policy

TA Research says “all eyes are on visa-free travel”.

PETALING JAYA: TA Research has upgraded Malaysia Airports Holdings Bhd (MAHB) to a “buy” rating from “hold” as the recent selling pressure appears to be overdone.

In a report on the airport operator, the research outfit highlighted that “all eyes are on visa-free travel”.

It said expectations are running high on travel demand to and from China and Malaysia, thanks to the establishment of visa-free entry effective Dec 1, 2023, which will exempt visa requirements for Malaysian tourists for 15 days and Chinese tourists for 30 days.

“MAHB’s traffic data from Dec 23 to the first quarter of 2024 (1Q24) would serve as important indicators of the return of Chinese visitors to Malaysia,” TA Research noted.

Moreover, the research house is optimistic about a possible visit by President Xi Jinping to Malaysia next year, anticipating it will bring excitement and potential growth to the country’s tourism and hospitality industry.

Notably, the government has set the target of attracting five million Chinese tourists annually with the introduction of the the visa-free regime.

“This is a tall order, in our opinion, considering the fact that only 3.1 million tourists visited Malaysia in 2019,” TA Research said.

However, the research house emphasised the strong growth in international travel as MAHB recorded 6.8 million passengers for its Malaysia operations in October 2023, reflecting a 1.5% month-on-month (m-o-m) decrease but a significant 25.5% year-on-year (y-o-y) increase.

The stable passenger figures were supported by robust growth in both international and domestic traffic, especially considering the high-base effect due to the Deepavali festival in October, along with the general-election campaigns late last year, TA Research said.

For the first 10 months of 2023, the growth in cumulative passenger movements in Malaysia moderated to 65.6% from 71.8% a month ago, totalling 67.4 million.

This accounted for 74.9% of TA Research’s full-year forecast of 90 million, which is deemed within expectations, as 2023 passenger growth is anticipated to be back-end loaded.

The resilient growth in passenger movements was in tandem with the gradual increase in airline seat capacity, which surged 3.3% m-o-m.

“In addition, the average load factor increased by 0.2 percentage points, with stable demand from North-East Asia, South Asia, and South-East Asia, where passenger movement grew by 2.2%-12.2% m-o-m,” TA Research added.

The growth in monthly domestic volume moderated to 3%, reaching 3.4 million, reflecting the impact of a high-base effect, representing 80% of pre-pandemic levels in 2019.

Moving forward, TA Research expects the growth to slow as airlines are allocating more capacity to international destinations for higher yield.

In the international segment, total passenger movement increased to 3.4 million, a 3.5% m-o-m and a significant 60.8% y-o-y rise in October.

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