Turning footfall into higher profits

THE projected RM329bil in tourism receipts for this year stemming from Visit Malaysia 2026 (VM2026) is a massive figure.

It is more than triple the tourism receipts recorded in 2024.

There are signs that the target is achievable. For the first eight months of 2025, tourism receipts reached RM186.4bil.

Much of this is expected to spill over into the equities market, where tourism-related companies stand to gain.

In the following two pages, we highlight eight stocks that we believe are worth a closer look as potential beneficiaries of this tourism boost.

For fund manager Neoh Jia Man, the tourism theme is a significant one that has been building up nicely.

The portfolio manager at Tradeview Capital says tourism has been a meaningful pillar of the country’s domestic economy and plays an important role in underpinning domestic demand.

“In 2024, the tourism industry contributed around 15% of Malaysia’s gross domestic product (GDP), with international tourists and excursionists accounting for roughly 6%, while the sector supported close to 22% of total employment,” he tells StarBiz 7.

Neoh also notes that the improvements in visitor arrivals, coupled with supportive measures such as visa-free waivers and enhanced connectivity, have provided VM2026 with a strong and steady foundation to achieve its targets.

Visitor arrival numbers and expected spending are set to provide a boost to relevant local companies.

Neoh reckons earnings for these companies could vary depending on their degree of exposure to tourism flows.

Genting Malaysia Bhd, Aquawalk Group Bhd, Only World Group Holdings Bhd and AirAsia X Bhd are among the names that could directly benefit from higher visitor arrivals.

“At the same time, resilient domestic travel demand provides a stabilising base for earnings, particularly for operators with diversified customer profiles.

“That said, the impact remains uneven across the listed universe and highly company-specific,” he acknowledges.

But have local tourism-related stocks already priced this in?

Neoh says he does see selective upside potential in companies with clear and direct exposure to tourism demand.

However, he remains mindful of risks, particularly a strengthening ringgit, which could temper tourist spending.

The strength of the ringgit has become an increasingly important factor in shaping tourist inflows and the revenue outlook for tourism-linked companies.

Paradigm Securities head of research Ben Shane Lim says a stronger ringgit could deter inbound tourists while also spurring outbound travel, as Malaysians take advantage of the currency’s strength to holiday abroad.

“We will be keeping a close eye on Singapore, since it is the biggest source of tourist arrivals. Changes in sentiment across the causeway could be a key determinant of VM2026’s success,” he opines.

According to Lim, foreign tourism spending typically contributes between 5% and 6% of GDP.

“Even if we optimistically assume foreign tourist arrivals grow at a healthy mid-teens pace on the back of VM2026, the relative impact to overall GDP will be modest.

“I wouldn’t argue that we are in some sort of structurally stronger growth phase, but rather that we are coming from somewhat of a low base. It has taken over three years for tourist arrivals to recover to 2019 levels,” he explains.

He reckons tourist arrival growth of under 10% is a more realistic assumption, with room for upside.

Fortress Capital chief executive officer Datuk Thomas Yong cautions against overstating tourism’s weight relative to other parts of the economy with stronger structural drivers such as manufacturing, commodities and financial services.

He says the multiplier effect of tourism is the more compelling aspect.

Yong explains that tourism supports a broad ecosystem – from aviation and airports to hospitality, retail, food and beverage, and even real estate investment trusts.

“Tourism remains a supplementary growth driver, not the core pillar of Malaysia’s equity market. Our outlook is, therefore, constructive but selective rather than outright bullish on the sector as a whole.”

He adds that for listed companies, a healthy balance between inbound tourist spending and domestic travel would provide better earnings visibility.

“Companies overly reliant on foreign arrivals may see sharper swings. Heading into VM2026, this balance will be more important than headline arrival numbers,” he says.

On what investors should look for, Yong says that as most low-hanging fruit – especially companies with clear earnings visibility and strong balance sheets – has already been picked, investors should seek companies with significant operating leverage.

He is referring to businesses such as malls and airlines that can handle an influx of visitors without a corresponding spike in fixed costs.

“If a company can’t grow its margins during a Visit Malaysia year, it likely never will. Stock selection at this stage should have a higher emphasis rather than a broad sector bet.”

Ultimately, the key question is whether these companies can turn footfall into higher profits.

Yong says VM2026 would indeed be a catalyst, but for earnings growth to be sustainable beyond the campaign, companies must demonstrate that gains are not purely volume-driven.

“We prefer companies that use this windfall to deleverage or reinvest in asset upgrades, rather than those that simply ride the wave and let costs drift higher,” he adds.