Equity Analysis /

Thai:Transport&Logistics-BUY cheap stocks ahead of strong earnings announcements

  • Road & rail on the road to recovery

  • Airlines to report losses, but a good entry point?

  • Freight rates will remain strong through 2022

Bualuang Securities
9 May 2022

We expect strong 1H22 earnings for Logistics stocks, driven by elevated freight rates. Inland transport firms’ operational numbers will gradually recover, in tandem with the easing of COVID-19 effects. Airlines will continue marking losses through 1H22, but we see this juncture as a good time for bottom-fishing, as air traffic is starting to recover. AAV is our top pick among our Transport coverage. PSL and RCL are our top logistics picks.

Road & rail on the road to recovery

Inland transport (both mass-transit and expressway) is resuming, as COVID-19 is gradually turning from a pandemic into an endemic—but not particularly dangerous—disease. Our model points to BEM’s earnings marking an incipient recovery for 1Q22 (up YoY but down QoQ) and jumping YoY and QoQ for 2Q22, led by greater traffic and ridership. BTS’s core profit for 4Q21 (Jan-Mar 2022) should rise YoY (easing COVID-19 effects) but decline QoQ (seasonally heavier SG&A costs). We expect its 2Q22 number to decline YoY (heavier interest expenses and lighter mass-transit E&M revenue) but rise QoQ (greater travel activity and ad spending).