Capitalising on the tourism momentum

Genting Malaysia Bhd

Genting Malaysia Bhd (GenM) is Malaysia’s largest integrated leisure and hospitality operator, anchored by Resorts World Genting, which includes hotels, casinos, theme parks, retail outlets, and food and beverage offerings.

Its earnings are directly correlated with visitor volumes, particularly high-spending inbound travellers from China and Singapore – segments likely to be boosted by Visit Malaysia 2026 (VM2026).

Financially, GenM is still slowly getting healthier after it made a shocking net loss of RM457.9mil in the fourth quarter ended Dec 31, 2024, dragged mainly by foreign-exchange impacts and non-operating losses.

Its latest third quarter of financial year 2025 (FY25) showed net profit of RM119.69mil, a sharp decline from RM569.16mil a year ago, despite stronger revenue of RM3.36bil versus RM2.75bil.

CIMB Research has turned positive on GenM, upgrading its call to a “buy” with a higher target price of RM2.70.

This reflects the potential upside from a downstate New York commercial casino licence, partly offset by a rollback in the research outfit’s assumptions on debt reduction at Empire Resorts, GenM’s wholly-owned subsidiary.

Analysts are forecasting a gradual recovery in net profit (10% to 15% annual profit growth in FY26 and FY27) as tourism volumes normalise.

Dividend yield currently sits at around 4.9%, supported by a historically steady payout although growth has been uneven.

Given the group’s high gearing levels, CIMB Research does not expect dividends to be sustained in the near term, as the group is likely to prioritise cash conservation.

GenM’s income streams scale strongly with arrivals, whereby hotel occupancy and room rates, gaming volumes and theme park footfall tend to rise disproportionately with higher visitor numbers, providing meaningful operating leverage once break-even thresholds are exceeded.

Key catalysts include sustained growth in arrivals from China, higher hotel yields and a ramp-up in theme park visitation.

AirAsia X Bhd

AirAsia X Bhd (AAX) is Malaysia’s long-haul, leisure-oriented airline and a key beneficiary of outbound and inbound tourism demand. As travel rebounds, especially routes linking Malaysia with North Asia, Australia and Europe, AAX stands to capture higher passenger volumes and improved load factors.

Recent corporate developments indicate a major debt restructuring and the integration of short-haul operations into AAX, aiming to unlock scale, improve route economics and streamline cost structures.

The combined airline targets near-term revenue of US$6bil with a 20% earnings before interest, taxes, depreciation and amortisation (Ebitda) margin, while repaying pandemic-era debt within the next few years.

According to Hong Leong Investment Bank Research, AAX is well positioned to be a major beneficiary of VM2026.

“With the largest network connectivity and flight frequencies serving the Malaysia hub, AAX is well placed to capture this incremental demand,” it says, adding that the airline is likely to benefit from easing jet fuel prices and a strengthening ringgit.

The research house has upgraded AAX to a “buy” with a higher target price of RM3.35. It believes the stocxk remains undervalued relative to peers.

Passenger traffic has been recovering, with load factors above 80% in parts of 2023 and 2024, a positive indicator of tourism-driven demand.

However, dividend history is limited, which is typical for airlines reinvesting cash flows into fleet and network expansion.

AAX’s core long-haul routes align closely with tourism corridors, and VM2026 could further boost load factors, ancillary revenues and network utilisation.

However, the sector’s capital intensity, exposure to fuel costs and sensitivity to macroeconomic conditions remain key risks.

PETRONAS Dagangan Bhd

PETRONAS Dagangan Bhd (PetDag) is the retail and marketing arm of Petroliam Nasional Bhd’s (PETRONAS) downstream business, operating Malaysia’s largest network of fuel stations and convenience stores.

While not a direct tourism play, its fuel and retail operations benefit from higher domestic and inbound travel, including road tourism flows tied to VM2026.

MBSB Research is positive on PetDag’s outlook this year, citing the inelastic demand for its products, underpinned by strong domestic consumption and VM2026 initiatives.

PetDag boasts a solid earnings and dividend track record, with a price-to-earnings ratio (PER) of around 19 times and a dividend yield of 4% to 5%.

MBSB Research believes that PetDag is still attractive, keeping its “buy” call and raising its target price to RM23.64.

Dividend growth has been resilient, supported by stable downstream margins and consistent retail volumes. Fuel demand is generally defensive but sees incremental gains from increased travel, driving higher convenience store sales and throughput at service stations.

PetDag’s established network of over 1,000 outlets and strong brand give it pricing power in a fragmented market.

Key catalysts include rising domestic road traffic and cross-state travel from tourism campaigns, which tend to lift fuel sales and convenience store revenues.

IHH Healthcare Bhd

IHH Healthcare Bhd is Malaysia’s largest listed private hospital operator and one of Asia’s biggest healthcare groups, with core markets in Malaysia, Singapore, Turkiye (Acibadem) and Greater China.

The group sits at the heart of Malaysia’s medical tourism strategy, making it a prime beneficiary of the Malaysia Year of Medical Tourism 2026 initiative running alongside VM2026. Analysts expect earnings momentum to strengthen into the end of the current financial year.

Hong Leong Investment Bank notes that growth will be led by Singapore and Acibadem operations, supported by the opening of Mount Elizabeth Hospital @ Orchard in September 2025 and seasonal strength in Turkiye.

Singapore and Turkey are IHH’s highest-margin markets, meaning incremental patient volumes typically translate into outsized Ebitda growth once new hospitals complete their initial ramp-up.

Financially, IHH has returned to a solid growth trajectory. FY24 revenue reached RM24.38bil with net profit of RM2.66bil, while earnings rose on higher inpatient volumes and an improved case mix. Consensus forecasts point to mid-teens earnings growth into FY26 as new capacity comes online and pricing remains firm.

Valuation remains supportive for a defensive growth name. IHH trades at roughly 24 to 26 times forward earnings, in line with regional peers but below its historical peaks, offering a modest dividend yield of around 1.5% to 2%.

Among listed healthcare stocks, IHH offers the clearest combination of scale, balance-sheet strength, and direct exposure to the medical tourism upcycle.

KLCCP Stapled Group

Anchored by the iconic PETRONAS Twin Towers in Kuala Lumpur’s most visited tourist precinct, KLCC Stapled Group (KLCCP) stands to benefit meaningfully from VM2026, leveraging its premier mall, Suria KLCC, and luxury hotel, Mandarin Oriental Kuala Lumpur. The stapled security combines KLCC real estate investment trust (REIT) and KLCC Property Holdings Bhd into a single listed unit. Its commercial portfolio also includes several other Grade-A offices, with Suria KLCC and Mandarin Oriental accounting for a significant portion of earnings, boosted by their adjacency to KLCC Park, a major visitor draw.

KLCCP, Malaysia’s largest REIT, trades at RM9.30 with a PER of 19 times, in line with other tourism-linked REITs.

Despite new retail openings in the Klang Valley in 2025, analysts say prime destination malls like Suria KLCC will maintain near-full occupancy and strong tenant line-ups.

The stock offers a defensive yield of about 5.2%, according to RHB Research. The group’s nine-month 2025 core earnings of RM611.1mil met 72% of full-year estimates, while Ebit held steady at about 64%.

With fixed-rate financing and 32% gearing, interest costs remain manageable. The research house says management plans no immediate acquisitions without stable income, reflecting a disciplined capital approach.

HI Mobility Bhd

HI Mobility Bhd (HiMob) operates cross-border and intercity bus services connecting major Malaysian cities with Singapore, positioning it to benefit from tourism flows and regional mobility demand.

The company trades at a PER of around 28 times, with a modest dividend yield of 1.2%. As a smaller, more specialised transport operator, its growth is tied closely to passenger volumes on land routes, including domestic travel and Singapore-Malaysia tourism corridors.

AmInvestment Bank Research continues to favour HiMob as it offers a unique mix of defensive earnings visibility and scalable growth, positioning itself as a re-rating candidate.

It maintains a “buy” call on the counter with a higher target price of RM3.60 based on a 20 times forward PER.

HiMob’s nine-month FY26 core net profit of RM41mil has exceeded expectations on lower operating costs, almost matching FY25’s full-year run-rate, putting it on track for a new annual high.

The firm has modest dividend payouts and has expanded its fleet and share base in recent years.

Analysts say VM2026 could boost cross-border and domestic travel, particularly from Singapore tourists, though the impact is smaller than for airlines or hospitality operators.

Execution and route expansion remain key drivers for the company’s valuation upside.

Padini Holdings Bhd

A homegrown fashion brand with over 140 stores nationwide, Padini Holdings Bhd is well positioned to benefit from rising tourist footfall, with outlets anchored in major malls and key destinations including Kuala Lumpur, Melaka, Penang and Johor.

Key outlets in malls like TRX and KLCC – popular with both foreign tourists and locals – rank among the group’s top performers.

The stock trades at a modest 12 times PER, below its five- and 10-year averages of 13.3 times and 15.9 times, respectively.

Following improved first quarter of FY26 earnings, several research houses have upgraded or reaffirmed “buy” calls, citing steady demand, margin improvements and expected support from VM2026.

Bloomberg data shows eight “buy” calls and one “hold”, with a consensus target price of RM2.34.

At the time of writing, its shares were trading at RM2.01, having gained 11%, or 20 sen, in January on early signs of tourism- and season-driven momentum.

While cost pressures persist, the recent sales and services tax cut to 6% from 8%, coupled with a firmer ringgit, should partially offset operating headwinds.

The group continues to optimise its product portfolio and operational efficiency, with plans to renovate 11 stores and open five new outlets in FY26. Historically, such reopenings have increased sales per store by around 3% on average.

As of end-September 2025, Padini maintains a robust net cash position of RM748mil, equivalent to 38% of its current market cap, underpinning healthy dividend yields of 4.5% to 4.8% through FY28.

With Malaysia accounting for roughly 97% of FY25 sales, the group is poised to benefit from a domestic consumption and tourism upcycle, analysts say.

Life Water Bhd

Life Water Bhd may be less familiar to Peninsular Malaysia consumers compared with brands like Spritzer Bhd, but it has carved out a strong foothold in Sabah, leveraging its deep distribution network and local brand recognition.

The company is the largest bottled water producer in Sabah and the fourth largest in Malaysia.

Analysts say the state’s rising popularity, driven by eco-tourism, island and adventure travel, is further supported by the Explore Sabah campaign (from April 2025 to February 2026), which was launched in line with VM2026.

This surge in tourism is expected to spur concentrated demand for bottled water and ready-to-drink beverages across remote hubs and resorts.

Since the launch of the Explore Sabah campaign, Life Water shares have seen a steady uptrend, rising 100% to RM1.68 at the time of writing, reflecting investor optimism about tourism-driven demand.

Among the more bullish research houses, CIMB Research initiated coverage last month with a target price of RM2.05, based on 18 times 2027 forecast PER, roughly a one-fifth discount to the 22.6 times weighted average 2027 PER of local bottled-water peers.

The research house notes that airlines are ramping up for rising passenger volumes, with AAX alone targeting five million arrivals to Sabah in 2025, up from 3.1 million in 2024, underscoring a strong tourism growth trajectory.

Life Water’s expansion plans beyond Sabah, combined with robust capacity growth, underpin CIMB Research’s projected three-year core net profit growth of 22.9% for FY25 to FY28, ahead of Spritzer’s 15.3%, positioning both players to benefit from Malaysia’s tourism upcycle.