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The investment bank said this projection is bolstered by “stronger government policy support, the ramping up of international air travel capacity and firm demand from niche sub-sectors like medical tourism”.
“Despite the less-than-ideal pace of recovery, we see a pocket of opportunity in near-bound tourism.
“Although the current narrative is in line with ongoing efforts by China’s government to pivot towards a domestically-driven economy, we believe the lag in outbound performance is not fully factored in as travellers do exhibit the desire for travelling abroad based on our observation,” it said in a research note.
AmInvestment said it also concurs with the prevailing market view that supply-side issues, particularly slower visa approvals and limited flight capacity, played a more prominent role.
The investment bank has maintained its “overweight” call on the sector.
“Our top pick is Malaysia Airports Holdings Bhd, with a buy call at the fair value of RM8.07 per share, as it is a direct proxy to Malaysia’s aviation,” it added.
AmInvestment also highlighted some potential de-rating factors. These included a slower-than-expected recovery in Malaysia’s air travel demand amid looming concerns of a global economic slowdown.
Additionally, worsening supply chain issues could have impacted the capacity to undertake air travel, along with unfavourable travel restrictions in key regions such as China.
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