ASPS Expects Phuket Sandbox to Boost Aviation-Tourism Plays, Top Pick: AAV-BA-CENTEL-MINT

Asia Plus Securities (ASPS) forecast Thailand’s reopening to foreign tourists on July 1, under the Phuket Sandbox program, would have positive sentiment on aviation and tourism plays that make income in Phuket but have insignificant impact on their income and earnings. ASPS highlights best stocks for investing as follows:

Aviation (Top Pick: AAV, BA) – This mainly has positive sentiment on aviation plays. In July 2021, 426 flights and 11,894 passengers were booked to Phuket, making up only 4.5% and 0.84% of the pre-COVID-19 levels of 9,397 flights and 1.41 million passengers in July 2019. Airline plays are facing higher risk than airport plays. During Phuket Sandbox, the cabin factor was  27.9 passengers per flight, which is still a loss-making level, so they will hardly benefit from this in the short term. 

Moreover, COVID-19 infection is still worrying fast, while vaccine rollouts are still lower than expected.

Asia Aviation Public Company Limited (AAV) and Bangkok Airways Public Company Limited (BA) have been expensive amid positive projections, with PBV band 1SD higher than the five-year average. Switch to AOT.

Tourism-hotel  (Top Pick: CENTEL, MINT) – This only has positive sentiment on tourism plays. Yet, not many foreign tourists are expected to come back soon because Certificate of Entry (COE) issuance takes time and the COVID-19 situation in Thailand is still worrying. Although this has a small fundamental impact, it is a good beginning for reopening of Thailand’s tourism. If Phuket Sandbox does not cause COVID-19 to spread faster in Phuket, this may lead to reopening of other major tourist destinations in the South. The market is watching monthly tourist volume, which would affect these stocks.

Central Plaza Hotel Public Company Limited (CENTEL) (TP: ฿40) makes 48% of revenue from upcountry hotels (25% from Phuket, Krabi, and Koh Samui) and it has stronger financial position than most hotel plays under coverage. 

Minor International Public Company Limited (MINT) (TP: ฿34) makes 62% from overseas hotels, so it would benefit from this less than peers. Nevertheless, MINT benefits from rapid vaccine distribution in Europe because 50% of European population have received at least one dose of vaccine, more than Thailand (10%) and the worldwide average (23%).