With the virus becoming an endemic and the high vaccination rate, the travel industry should experience a sharp rebound in demand. More importantly, the Malaysian government had relaxed the rules for inbound travelers last week and also reduce the number of days for quarantine.
Here's an overview of the number of passengers traveling by flight. We are seeing a sharp increase in domestic travel and a recovery in the number of international travelers.
In the meantime, the valuation for hotels and shopping mall REITs that caters to tourist remains low. Investing in these 2 sectors serves as a good opportunity to ride on the recovery of Malaysia's tourism industry.
Also, we would avoid airlines operator in the meantime due to their massive debt and potential huge dilution in shareholders' equity. We are also avoiding tourism attractions that rely on China tourists' arrival as we don't think China will allow their people to leave their country for leisure purposes so soon due to the zero virus policy.
Source of the chart: Maybank Research
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