Ahead of the 1Q23 earnings report, KGI Securities on Tuesday published an analysis covering hospitality stocks such as MINT, ERW, SPA, and SHR, in which profits of most hospitality-related companies are expected to rebound strongly in the first quarter, following Thailand’s gradual economic recovery from the outbreak of COVID-19 during 2022, mainly boosted by increased foreign tourism arrivals.
KGI Securities holds an Outperform rating on Minor International Pcl. (SET: MINT) with a target price of THB43.00 per share. THe brokerage expects MINT to report a 1Q23 normalized profit of THB170 million, turning around from a loss of THB3.58 billion in 1Q22 and declining 93% QoQ. RevPar is expected to soften QoQ on the low season for hotels in Europe, but jump 85% YoY, while SSSG for its restaurant business is expected to expand 11% YoY on the back of the low base for its Australia hub. 2023 normalized profit is forecasted at THB6.36 billion.
Risks to rating included political turmoil and longer-than-expected COVID-19 outbreak.
S Hotels & Resorts Pcl. (SET: SHR) is projected to report a 1Q23 normalized profit of THB180 million, recovering from a loss of THBt199 million in 1Q22 and growing 44% QoQ. The strong recovery YoY would be mainly due to a jump in revenue of 56% YoY, on the back of exceptional growth from Thailand and Outrigger hotels. KGI Securities reiterates its positive outlook on SHR’s normalized profit in this year at THB450 million, from only THB14 million in 2022. So, maintaining a rating of Outperform on SHR with a target price of THB6.10.
KGI named SHR as its top pick stocks, citing the strong earnings momentum in 1Q23.
The Erawan Group Pcl. (SET: ERW), meanwhile, likely to deliver a multi-quarter high normalized profit of THB230 million for 1Q23F, turning around from a loss last year and rising 9% QoQ. Excluding the budget hotels, RevPar is expected to be positive at THB2,611 (+370% YoY, +6% QoQ) boosted by the return of international tourists. Given the positive outlook ahead, KGI Securities maintains a rating of Outperform with a target price of THB6.30. KGI also noted that ERW remains one of its top picks.
KGI Securities also reiterated its Outperform rating on Siam Wellness Group Pcl. (SET: SPA), with a price target of THB12.50. Net profit for the first quarter is expected to stand at THB28 million, compared to a loss of THB57 million in 1Q22 and rising 105% QoQ. The return of international tourists would be a key driver for its spa revenues and profitability. Also, the company launched cannabis-infused products during March and April 2023, which should be a long term catalyst.
