Tourism/Hotel

Tourism & Hotel  

 

- Robust tourism despite low season 

 

Thai tourism in 2Q15 has been as robust as 1Q15 (high season). Tourist volume leapt by 25%yoy to 2.42 million in April and jumped by 28.5%yoy to 1.79 million on May 1-25. With currently stable politics and continuously increasing tourists from China, tourist volume is projected to grow by at least 20% to 1.87 million in June and make a new high at around 6.5 million (up 22%yoy) in 2Q15. Full-year tourist volume is estimated at least at 28 million, rising 13%yoy. 

 

- Hotels’ profit to jump yoy in 2Q15-4Q15 

 

Earnings of the tourism-hotel sector (ERW, CENTEL, and MINT) are projected to grow as tourism recovers. Their profit would make the year's peak in 1Q15, weaken in 2Q15-3Q15 (low season), and then rebound again in 4Q15 (high season). The sector's 2Q15-4Q15 earnings are expected to improve from the same period last year as the tourism has been more robust and these companies has been investing in new hotels and other businesses, e.g. food and property. Overall, the tourism-hotel sector's FY2015 profit is projected at B7.5bn, leaping 41.5%yoy. 

 

- OVERWEIGHT. Top picks: ERW, MINT 

 

Thanks to the peaceful politics and weak THB, more tourists have visited Thailand and the sector's earnings are projected to grow by 41.5%yoy this year, surpassing expected market EPS growth of 24.8%. We upgrade our recommendation to OVERWEIGHT. Top picks are ERW and MINT with upsides of 36% and 29%, respectively; they have been underperforming peers.