We have re-initiated coverage on AOT, CENTEL, and ERW with BUY calls and target prices of Bt77, Bt47, and Bt4.50, respectively. Tourism bottomed out in 2021 and is now definitively in recovery mode. We are OVERWEIGHT on the sector. AOT is our top pick as a play on fast-expanding visitor arrivals; CENTEL is clearly in profit recovery mode and ERW will follow suit soon.
Recovery in progress
After a two-year COVID-induced slump, the Tourism sector bottomed out in 3Q21 with visitor arrivals of just 45k persons. But the sector is now clearly in recovery mode—arrivals totaled 342k in 4Q21 and 470k in 1Q22. The recovery will swiftly build momentum through 2Q22, supported by the easing of cross-border travel restrictions by Thailand and major tourist markets. For the first week of April, the Office of the PM reported 81k tourist arrivals, up 65% MoM. We expect 1.0m arrivals for 2Q22. Our base-case 2022 visitor arrival assumption is 6m persons (15% of the 2019 number)—1.5m in 1H22 and 4.5m in 2H22.