Thai Tourism

The Centre for Covid-19 Situation Administration (CCSA) on Monday (September 27) approved adjusting curfew hours to 22:00-04:00, extending opening hours for shopping centers and convenience stores until 21:00, and allowing 10 additional businesses to reopen, such as spa, cinema, and live music in restaurant. The CCSA also reduced the quarantine duration to a minimum of 7 days for fully vaccinated tourists, starting October 1, 2021. Meanwhile, on November 1, 2021, the “Sandbox” model will reopen for international visitors in ten more destinations, including Bangkok, Krabi, Phang Nga, and Chiang Mai. Maybank Kim Eng (Thailand) (MBKET) has a “NEUTRAL” view on Thailand’s tourism sector, considering the partial re-opening positively, in particular, Bangkok should see a moderate recovery in 4Q21 as it is a major destination for all Thai tourism companies. The normalised revenue contribution from tourism in Bangkok is 75% for AOT, followed by 58% for ERW, 45% for AWC, 11% CENTEL and less than 10% for MINT. Despite the fact that Thailand's COVID-19 situation has improved and infection rates are declining in September, many countries continue to require quarantine when their citizens return from Thailand. This led MBKET to believe that the recovery in the peak season of 4Q21 could be moderate, with a potential for a significant recovery in 2H22 as the pandemic subsides. Additionally, MBKET believes the partial reopening plan in November should help Thai tourism to recover. Nevertheless, there are still challenges ahead and it believes the recovery is priced-in for the sector. Airports of Thailand Public Company Limited (AOT) (WACC 6%, growth 2.7%) is MBKET’s top pick due to its monopolistic status in the Thai airports business and it is a gateway to Thailand, giving a target price of 74.00 baht. Its long-term earnings are also supported by the additional duty-free concession from King Power, and dependent on the recovery of international passengers.