KUALA LUMPUR: CGS-CIMB believes reciprocal Malaysia-China visa exemptions will prove to be a major catalyst for Malaysia Airports Holdings Bhd (MAHB) which has seen airline seats between Malaysia and China halved since 2019.
On Friday, Nov 24, 2023, the Chinese government announced that it will permit Malaysian nationals 15-day visa-free entry from Dec 1, 2023 to Nov 30, 2024 on a trial basis for business, tourism, visiting relatives and friends (VFR), and transit purposes.On Sunday, Nov 26 2023, Prime Minister Datuk Seri Anwar Ibrahim reciprocated by announcing 30-day visa-free entry for visitors from China effective Dec 1, 2023.
"The back-to-back announcements by the Chinese and Malaysian governments are very positive for MAHB's passenger traffic recovery and we expect this to be warmly received by investors. Thailand had launched a unilateral visa-free programme for Chinese visitors for six months between Sep 25, 2023 and Feb 29, 2024, without reciprocity from China. By comparison, we expect the reciprocal arrangement between China and Malaysia to trigger great interest for mutual travel," the research firm said in its note dated Nov 27, 2023.
It said airline seats between Malaysia and China were only 55 per cent of the equivalent week in 2019, last week, (compared with 78 per cent for Indonesia, 79 per cent per cent for India, 85 per cent for Thailand, and 89 per cent for Singapore), suggesting plenty of scope for travel to/from China to recover.
Travel between Malaysia and China made up 11.2 per cent of MAHB's total international passengers in Malaysia in 2019, second to Indonesia (which made up 18.4 per cent of the same), but more than Singapore (9.5 per cent), Thailand (9.4 per cent), and India (8.1 per cent).
On Nov 26, 2023, Anwar also announced 30-day visa-free entry for visitors from India, and selected countries from the Middle East (Saudi Arabia, Bahrain, Kuwait, United Arab Emirates, Iran, Türkiye, and Jordan).
Malaysia's visa exemption for India also tackles a major regional source market for visitors.
Meanwhile, the Middle East travellers granted visa exemption by Malaysia made up only c.3.5 per cent of international pax in 2019, excluding the umrah/Haj pilgrims to Saudi Arabia that made up another 2.5 per cent.
"Still, we welcome every little bit of incentive for travellers to come to Malaysia," CGS-CIMB said in its note.
It reiterated its "Add" call for the stock with an unchanged target price of RM7.76 a share.
MAHB is releasing its 3Q23F results on Nov 20, 2023, and key rerating catalysts for the stock include positive guidance on its pax traffic and commercial revenue restoration.
MAHB recently said that 90 per cent of its tenanted airport shops should be open by end -2023.
Downside risks CGS-CIMB's rating on the MAHB include possible delays in the signing of the new pperating agreement, which expected to be signed next month, and delays in the gazette of new aeronautical tariffs by the Malaysia Aviation Commission (Mavcom).