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5 stocks that will surge as Thailand reopens

  • Thailand is set to allow vaccinated travellers from 46 countries from today

  • Thailand is one of the most tourist-dependent economies, with travel & tourism representing 22% of GDP in normal times

  • We identify 5 potential winners from the easing of restrictions

5 stocks that will surge as Thailand reopens
Nirgunan Tiruchelvam
Nirgunan Tiruchelvam

Head of Consumers Equity Research

Tellimer Research
1 November 2021
Published byTellimer Research

Thailand will allow vaccinated visitors from 46 countries from today. The list includes the US, Japan and most European countries.

The move is a shot in the arm for the massive Thai travel and tourism industry, which contributed one-fifth of the country's GDP pre-Covid and has suffered greatly through the pandemic.

The good news for the travel industry has been accompanied by an easing of restrictions on the food & beverage and entertainment sectors:

  • Bars & restaurants can now serve liquor until 9pm;

  • Cinemas can seat up to 75% of their capacity; and

  • Spas and massage parlors have been reopened.

Potential winners

We have identified five winners from this potential inflection point for Thailand, paying particular attention to the following factors:

  • Operating leverage. Operational leverage is the degree to which operating income changes with revenue. A hotel group like Minor International – one of our potential winners – was especially vulnerable on this metric during the period of heavy restrictions, given its ratio of fixed costs, such as staff and rent, to its total costs, is high. Minor International's revenue fell by 53% in FY 20 but its operating earnings declined by much more than that. Conversely, when its revenue rises, the impact on its operating earnings will be multiples of the increase in revenue.

  • Businesses that have been heavily restricted through the pandemic. Bars and spas are in this category.

5 stocks that could win from Thailand's reopening