Equity Analysis /

Asset World Corp PCL: Post-COVID growth play

  • Thailand’s leading listed commercial real estate asset developer

  • Growth beyond the recovery from COVID-19 effects

  • Upside from new business model

Kalvalee Thongsomaung
Kalvalee Thongsomaung

Equity Research Analyst

Bualuang Securities
10 June 2022

Beyond the COVID-19 recovery story, AWC is a growth play—12 new hotels that will open across Thailand, 2023-26, suggesting profit growth ranging 22-48% for those years. With its ability to up-gear debt, assuming a D/E ratio of 1.0x at YE23 (up from 0.6x at YE21), the firm could upsize its portfolio value by Bt32bn (up 30% from its current value). We have re-initiated coverage with a BUY call to a DCF-derived YE22 target price of Bt5.80.

Thailand’s leading listed commercial real estate asset developer

AWC’s stock price is still 15% below its 2019 IPO price and lags behind peers. Its valuation isn’t excessive, in our view—a YE22 PBV of 2.0x, versus a peer mean of 2.9x. We like AWC’s strong fundamentals, as follow: 1) 2023 earnings look set to beat the 2019 number (a performance recovery and asset acquisitions since 2020), 2) 12 new hotels will open during the next four years, suggesting 2023-26 profit growth ranging 22-48% and a low PEG ratio 0.2-0.6x, 3) a low YE22 D/E ratio of 0.6x, so scope to acquire more assets (a D/E ratio of 1.0x would imply adding Bt32bn to its portfolio), and 4) portfolio diversity—the hotel biz comprises 70% of revenue (and rising); the other 30% is commercial property, so there is some revenue-buffering during bad years for tourism.