THE reciprocal visa-free entry between Malaysia and China could trigger great interest for mutual travel, boosting Malaysia Airports’ traffic recovery, said CGS-CIMB on Monday (Nov 27).

This came in before the Q3 update by Malaysia Airports Holdings (MAHB) on Wednesday.

While the brokerage reiterated an “add” call for MAHB, with an unchanged target price of RM7.76, it highlighted guidance on passenger traffic and commercial revenue restoration could be a key rerating catalyst.

MAHB’s price-to-book value based on 2023 forecasts stands at 1.56, lower than the airports sector average of 2.89, the report indicated.

Last Friday, the Chinese government announced a 15-day visa-free entry permit for Malaysian, French, German, Italian, Dutch, and Spanish nationals from Dec 1, 2023, to Nov 30, 2024. This trial measure is for business, general tourism, visiting relatives and friends, and transit purposes.

Up till Dec 1, only Singaporean, Bruneian and Japanese passport holders can travel to China for up to 15 days without a visa.

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On Sunday, Malaysian Prime Minister Anwar Ibrahim also announced that, with effect from Dec 1, Malaysia will allow 30-day visa-free entry for visitors from China, India, and selected countries from the Middle East.

“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,” said CGS-CIMB analyst Raymond Yap.

Yap also noted that airline seats between Malaysia and China last week were only 55 per cent of the equivalent week in 2019, suggesting plenty of room for travel recovery.

In comparison, the traffic level with Singapore has recovered to 89 per cent of the week before Covid-19, and restored to 78 per cent with Indonesia.

He highlighted that travel between Malaysia and China made up 11.2 per cent of MAHB’s total international passenger traffic in Malaysia in 2019, following the top 18.4 per cent with Indonesia.

The passenger traffic with Singapore stood at 9.5 per cent of the total international traffic, and it with India stood at 8.1 per cent.

“Malaysia’s visa exemption for India also tackles a major regional source market for visitors,” said Yap, noting that the Middle East travellers with visa exemption only accounted for 3.5 per cent of the total international passenger traffic in 2019.