Our top turnaround play in tourism space is CENTEL, premised on clear earnings drivers, a QSR biz recovery to the pre-COVID era level, and strong ex-Thailand hotel performances, starting 1Q22. The firm stands to benefit from the lifting of travel restrictions and the potential acquisition of another QSR brand in 2Q22. We have a BUY call to at YE22 DCF-derived target price of Bt47.
What’s in the price?
CENTEL’s valuation is inexpensive for its turnaround phase, in our view—PERs of 33.5x for 2023 (its first full earnings recovery year to its pre-COVID era level) and 28.0x for 2024 (versus 27.9x in 2019). Thanks to its strategic growth plan, 2024 earnings are forecast to exceed the 2019 number by 17%. CENTEL’s fundamentals for 1Q22 onward look solid. We project a profit of Bt125m for 1Q22 (a loss of Bt475m in 1Q21). The profit drivers are the QSR biz, which has bounced back to its pre-COVID era level, and great performances at hotels in the Maldives and Dubai in 1Q22.