We remain bullish over the Tourism sector, as the profit recovery path is clear. Our models point to coverage earnings hitting 60% the 2019 level in 2023 and beating the 2019 number by 26% in 2024. AOT and AWC are our top picks. AOT is the key play for inbound and outbound tourism. AWC is our new top pick for its post-COVID earnings growth story (including a slate of new properties) and low PEG.
Tourism activity accelerating in 2H22
Tourist arrivals to Thailand have exceeded 1m persons/month since July 2022. The 8M22 cumulative total was 4.6m people. We believe 10m arrivals this year is realistic. The drivers are: 1) Thailand has normalized by dropping travel restrictions and promoting tourism, 2) Thai hotel room rates remain discounted to 2019 levels (in contrast, Singapore’s mean room rate is now at a six-year high), and 3) Thailand MICE is more attractive than Hong Kong/China (COVID-related restrictions) or Singapore (expensive). The full event line-up at the reopened Queen Sirikit National Convention Center (now 300k sq.m of usable space—more than 5x its pre-renovation area) supports our bullishness over the recoveries in tourism and the MICE industry that are taking shape.