Tourism Sector

Tourism sector

Entering high season… tourism flourishes since 4Q12 to 1Q13
Thai tourism still tends to be bright and is getting more vigorous
after entering the high season in 4Q12 as evident from the
number of international tourists who have arrived in Thailand in
October 2012, growing by 20.5% YoY and 6.3% MoM to 1.7
million persons. In November, there were 2.07 million tourists
which was the record high, increasing by 21% MoM and 60.6%
YoY due partially to the decrease of tourists in 2011 when the
flood crisis took place in the central region, especially in
Bangkok. We believe that there would be not less than 2.1
millions of tourists in December 2012 which is the high season,
projected to hit 21.9 million persons or 14% YoY increase and
rising constantly by 7% or to 23.5 millions in 2013 under the
condition that Thailand’s politics has to be calm.

Profit of hotel sector bright along with tourism… 4Q12 profit projected to grow 47% YoY
According to the aforementioned bright tourism outlook, this
would be beneficial for relevant companies and hotels under the
management of 3 companies (MINT, CENTEL, and ERW) which
would thrive on the occupancy and room rates. Accordingly,
4Q12 operating profit would be boosted to grow by 47% YoY to
B1.15bn and notably rise in 1Q12 continuously which is normally
the peak of seasonal profit. Combined with the benefits from the
peaking season, the hotel sector is projected to have B4.16bn of
operating profit or 66% YoY growth, continually growing by
15.6% or B4.8bn in 2013.

Most share prices fully valued… downgrade to “Underweight”
Although the profit of hotel sector tends to shine in the high
season, share prices of this sector have increased aggressively
in the past year and already have exceeded the SET Index.
Accordingly, most share prices are fully valued and might face
profit taking when the Index corrects. We downgrade our
recommendation from “Neutral” to “Underweight”.