International borders re-opening? Yup, this is what echoed by the National Recovery Council’s proposal to re-open Malaysia’s international borders as soon as 1st March, without the need for compulsory quarantines, and it looks like coming sooner than expected by all of us.
Anyway, this move is in line with that of many countries which have already adapted COVID-19 policies, to move towards a state of endemicity. Of course, the re-opening of borders will definitely help to lift market sentiment and be a significant milestone in the normalization process.
Which sectors will benefit from the reopening of Malaysia’s borders?
- The very first and early beneficiary is none other than our sole airport operator ~ Malaysia Airports (MAHB). With the reopening of Malaysia’s borders, international travel should lead to passenger traffic improving further, particularly for five of MAHB’s international airports, in addition to seeing higher passenger service charges from international travelers.Some of you may ask: "How about airlines such as Capital A (previously known as AirAsia Group)?"... Well, the highly indebted airline, now carrying the status of PN17, was not well received by most of the analysts currently. Hmmm... What do you think? 😏
- Consumer ☕Mynews could be the biggest beneficiary of the reopening of borders, especially for its stores located at transport hubs (WH Smith) and, given its store network that is more saturated in the Klang Valley where about 80% of its total stores are located. In tandem with the recovery in foot traffic, we can also be expecting positive contributions from its new venture in CU – with over 50 outlets since its maiden store opening in April 2021.Other than that, Berjaya Food and Padini could benefit from the reopening of borders as well, as the higher volume of tourists would lead to improved sales at Starbucks outlets and boost the footfall of Padini outlets - especially for stores located in airports that have been underperforming/closed since the onslaught of the pandemic.
- REITs 🛒🛍Where tourists will go when coming to Malaysia? Of course, our shopping malls. Meaning, the reopening of borders should also benefit KLCC Stapled and Pavilion REIT which have malls in the city centre. These malls are historically more dependent on tourism. Suria KLCC’s foot traffic in 4Q21 was only up to 50% of pre-pandemic levels, implying a contrast to other malls with largely domestic shopper profiles that saw footfalls recovering up to 85%.
- Healthcare 🏥Do you know that the medical tourism industry is worth about RM1.7 billion? The reopening of borders will be a piece of very happy news to the local healthcare industry. Having said that, the recovery should be gradual and the ramp-up will be dependent on how quickly countries of prospective patients are able to attain adequate vaccination coverage – since unvaccinated individuals are likely to be refused to enter into Malaysia.Fyi, in 2019, foreign patients represented 6% of IHH Healthcare’s revenue for Malaysia operations. Although small, it should meaningfully contribute to the still-lagging performance of its Malaysia market. Other than that, Sunway's healthcare arm will be another likely beneficiary too.
- Gaming 🎲No doubt, both Genting Malaysia (GENM) and Genting (GENT) will benefit from the return of foreign tourists. Resorts World Genting’s business will continue to recover strongly, especially with the recent opening of Genting SkyWorlds as it will be a crowd puller and can benefit other facilities within RWG through higher footfall.
- Technology 📶Hey, is it time to renew your expired passport? If yes, then Datasonic Group stands to benefit from the recovery theme and reopening of borders. Its passport-related solutions are expected to recover strongly on pent-up demand in the coming quarters that will anchor the earnings recovery.
What do you think?
Follow our active updates via Facebook @FinanceMalaysia
No comments:
Post a Comment
Finance Malaysia Blog appreciates your comment. Cheers!