Tourism Sector
High season for hotel business, upgrade to "NEUTRAL"
Tourism Sector
High season for tourism, more tourists to visit
Tourism business in Thailand is likely to be blissful. Despite low
season, 2.2 million international tourists entered Thailand in July
2013 and 2.47 million in August, growing by 22.5%yoy and
28%yoy, respectively, even more than 1Q13, which was a high
season with the average of 2.2-2.3 million tourists per month.
As long as there is no internal political unrest, 4Q13 would be a
high season, significantly boosting tourism industry. At least,
averagely 2.2 millions tourists per month are projected to visit
Thailand, likely to make 2013 total tourists the record high of at
least 26 million tourists, growing by 16.6%yoy (8M13 foreign
tourists reached 17.4 million, growing 21%yoy).
- Hotel sector to make significant profit in 4Q13-1Q14 due
to high season
Due to increasing number of tourists, 2H13 earnings results of
three companies under our coverage (CENTEL,ERW,MINT) are
projected to grow significantly from 2H12. 3Q13 earnings
forecast would stay close to 2Q13, then grow significantly in
4Q13 and 1Q14, which is a high season for tourism. FY2013 net
profit is projected at B6.6bn, growing 30%yoy. Excluding
extraordinary profit from ERW's hotel sale, hotel business'
normalized profit is projected at B5.74bn, rising 23.4%yoy,
likely to grow 18% further, reaching B6.8bn in 2014.
- Upgrade to "NEUTRAL". Top picks are ERW, MINT
Due to positive sentiment in hotel business in high season for
tourism and blissful earnings results, share prices in hotel sector
are likely to outperform. Thus, we upgrade from
"UNDERWEIGHT" to "NEUTRAL". Top picks are ERW ([email protected])
and MINT ([email protected]). ERW have the highest upside of 40%
and benefits from high season for tourism. Moreover, ERW is
likely to make great profit in 4Q13, as well as 1Q14, likely to
make the highest profit in 2Q14 if there is at least a sale of one
IBIS hotel in ERWPF. MINT has a good fundamental and low
risk, due to more diversification in various businesses, both
domestic and international.
