Stocks of hotel operators in Thailand mostly had a positive response, though not as high as expected, to the announcement from the new government on stimulus measures to boost the economy which includes a temporary free visa for Chinese and Kazakhstan tourists that should be a key driver to growth in the tourism sector.
The share price of Minor International Public Company Limited (SET: MINT) closed the morning session at THB 32.00 per share, increased THB 0.50 or 1.59%.
Menahile, The Erawan Group Public Company Limited (SET: ERW) rose to THB 5.60 per share, increased THB 0.10 or 1.82%.
S Hotels and Resorts Public Company Limited (SET: SHR) saw THB 0.02 or 0.70% gain to THB 2.88 per share. On the other hand, Central Plaza Hotel Public Company Limited (SET: CENTEL) closed at a flat line of THB 47.50 per share.
KGI Securities published its research papers this morning for an update on hotel operators as most of the companies are expected to see solid growth moving forward.
KGI expected MINT’s solid performance to continue in 2H23F with net profit surging 99% HoH backed by seasonality for hotels in Europe, as the first quarter is typically the low season. Both hotel and food businesses showed strong performances in July backed by solid demand for hotels in Europe and the reopening of restaurants in China.
KGI revised up MINT’s 2023F net profit 7% to Bt6.81bn, but fine-tuned 2024F net profit down 6% to Bt7.16bn. The analyst maintained a rating of Outperform and rolled target price over to 2024 at Bt45.00, from Bt43.00.
ERW is expected to continue to achieve high occupancy rates in 2H23F backed by solid performances from all segments. However, KGI expected its 2H23F net profit to drop 22% HoH due to pre-opening expenses related to four new hotels in Japan and higher interest expenses. Thanks to the strong RevPar in 1H23, KGI revised up ERW’s net profit 21% in 2023F and 35% in 2024F. Since the current share price seems to reflect most of the positive factors, KGI downgraded the counter to Neutral, from Outperform, with the target price rolled over to 2024 at Bt5.65, from Bt5.50.
Meanwhile, KGI expected CENTEL’s earnings to improve significantly in 2H23F and grow 23% HoH due to lower SG&A expenses from its hotel in Japan (Osaka). Meanwhile, the occupancy rate in July showed stronger momentum at 72% versus 65% in 2Q23. KGI revised down 2023F net profit 16% due mainly to higher SG&A and interest expenses but left 2024F net profit unchanged as income from the new hotel should offset higher expenses. KGI upgraded CENTEL to Outperform, from Neutral, and rolled target price over to 2024 at Bt56.00, from Bt50.00.
Lastly, the brokerage firm expected SHR’s 2H23F net profit to drop 130% HoH as KGI anticipated another loss in 3Q23F. Negative factors pressuring earnings include the temporary closure and renovation of hotels in many locations. KGI stated that it had a cautious view toward SHR’s earnings and revised down its net profit forecasts 97% to Bt5mn in 2023F and 61% to Bt104mn in 2024F due mainly to higher interest expense and lower GPM. KGI downgraded SHR to Neutral, from Outperform, with the target price rolled over to 2024 at Bt3.26, from Bt4.20.
