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Tourism Sector
Recommendation
Hotel
Overweight
Airport
Overweight
Airline
Neutral
Middle East respiratory syndrome (MERS) case had been identified in Thailand.
We expect the market to react negatively to this news. Panic selling in the
Tourism sector, including Hotel, Airport and Airline stocks, may be seen today.
However, we maintain our Overweight ratings on the Hotel and Airport sectors
as we believe the risk is short term. As we have learned from recent history,
stocks typically rebound to a normal level as concerns about the issue ease, and
we will view any stock correction this time as a Buying opportunity. For the Airline
sector, we maintain our Neutral rating due to the uncertain outlook from the
ICAO issue. Our new top picks are MINT and AOT.
Impact
Spread of virus will have only a short-term impact. Historical data suggests
the impact of virus outbreaks on the Thai tourism industry typically ranges from
3-6 months. The disease that caused the biggest impact was the SARS outbreak,
which caused international tourist arrivals to fall by around 10-50% YoY during
Mar to July 2013. After the outbreak was brought under control, international
tourist numbers quickly rebounded to a normal level (see Fig 4-5).
Tourism stocks down 10-20% during SARS. During the SARS outbreak in
2003, tourism stock prices fell in a range of 10-20% during Mar to July 2013 (see
Fig 6). But they recovered quickly to a normal level after the virus spread was
contained (see Figs 8-11).
MERS causes less concern than SARS. MERS does not appear to pass easily
from one person to another unless there is close contact such as poor clinical
care. Thus, we hope this outbreak can be brought under control faster than SARS,
which took about 4 months to contain.
Fundamental impact. We believe Thailand will able to control the spread of
Recommendation
Stock slump is a buying opportunity. Yesterday, tourism stocks fell sharply
due to concerns about the MERS issue (CENTEL -4%, MINT -2% , ERW -1%,
AOT -3%, AAV -3%, THAI -1% and BA -0.5%, vs. SET -0.5%). We expect to see
panic selling in tourism stocks today, but we would see such a share price
correction as a Buying opportunity.
Entry level & top picks. We view a decline of roughly 10-15% from the current
Analyst
Jitima Ratanatam
Jitima.r@kasikornsecurities.com
19 June 2015
Kasikorn Securities PCL
level as a signal that stocks were near their bottom. We suggest selective BUYs
on tourism stocks that have less earnings downside risk. Our new top picks are
MINT and AOT.
MINT & AOT. We select MINT as our top pick as its share price correction in
the past month implies an attractive valuation. Also MINT has less exposure
to hotels in Thailand, which face a risk from MERS, than CENTEL or ERW.
Thus, we expect MINT should face less earnings downside than CENTEL and
ERW. An entry level at Bt28, implies 20x PER in 2015 in line with its historical
average during 2011-14. For AOT, we suggest an entry level at Bt270, implying
25x PER in 2015, in line with 1.5x STD of historical avg.
Hotel
Airline
Airport
Rec.
CENTEL
OP
MINT
OP
ERW
OP
AAV
N
BA
N
BA (core business)
THAI
UP
AOT
OP
Price (Bt)
18-Jun-15
37.75
30
4.34
4.56
22.3
Fair price
(Bt.)
42.00
37.00
5.50
4.80
22.00
Upside
(%)
11.26
23.33
26.73
5.26
-1.35
9.00
360.00
-31.82
17.26
13.2
307
P/E (x)
2015E 2016E
29.58
22.79
20.93
18.62
45.71
26.59
12.40
10.87
22.65
19.96
-2.22
28.82
-19.90
24.57
P/BV (x)
2015E 2016E
3.90
3.46
3.40
2.97
2.11
1.95
1.04
0.96
1.72
1.63
0.74
0.69
1.02
1.07
4.22
3.75
0.00
1.22
86.92
27.93
154.20
16.80
-37.38
15.12
-5.24
16.17
Source: Bloomberg, KS
YoY
1%
26,547
0%
-1%
-5%
-3%
2003
2008
2015E
2014
2013
2012
2011
2010
2009
-7%
2008
2003
-10% -7%
2007
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
5%
5%
'000 persons
2,000
15%
13%
10%
5,000
2002
19%
16%
16%
15%
24,780
15,936
14,142
14,584
14,464
13,822
11,517
11,651
10,004
10,799
10,000
22,354
Coup
19,230
Tsunami impact
Sars
21%
20%
20%
20,000
15,000
25%
Flood
2006
25,000
2005
30,000
2004
'000 persons
% YoY
2009
60%
2003
2008
2009
40%
1,500
20%
1,000
0%
H1N1 in 2009
-20%
500
-40%
Sars in 2003
-60%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
Feb
Jan
19 June 2015
Tourism Sector
MINT
ERW
CENTEL
Asiana Airlines
0%
Korea Airport
Service
Korea Airlines
Hotel Shilla
0%
-5%
-5%
-10%
-5%
-10%
-11%
-15%
-11%
-15%
-16%
-20%
-22%
-25%
-20%
-20%
-18%
-21%
-25%
Source: Bloomberg, KS
Source: Bloomberg, KS
CENTEL
MINT
2.3
2.1
1.8
1.9
1.6
1.7
1.4
1.5
1.3
1.2
1.1
0.9
0.7
Source: Bloomberg, KS
Source: Bloomberg, KS
ERW
Jun-04
Apr-04
Feb-04
Dec-03
Oct-03
Aug-03
Jun-03
Apr-03
Feb-03
Dec-02
Oct-02
Jun-02
Aug-02
0.5
Jun-04
Apr-04
Feb-04
Dec-03
Oct-03
Aug-03
Jun-03
Apr-03
Feb-03
Dec-02
Oct-02
Aug-02
Jun-02
0.8
THAI
2.2
55
50
45
1.8
40
1.6
35
1.4
30
1.2
25
20
15
19 June 2015
Jul-04
May-04
Mar-04
Jan-04
Nov-03
Sep-03
Jul-03
May-03
Mar-03
Jan-03
Nov-02
Sep-02
Jul-02
Mar-02
Source: Bloomberg, KS
May-02
10
Jun-04
Apr-04
Feb-04
Dec-03
Oct-03
Aug-03
Jun-03
Apr-03
Feb-03
Dec-02
Oct-02
Aug-02
Jun-02
0.8
Source: Bloomberg, KS
Tourism Sector
Source: Bloomberg, KS
Source: Bloomberg, KS
PBV
5
4
60
2015
PER
50
+2SDV=3.16x
40
+1SDV=2.33x
30
2
2
Mean=1.51x
-1SDV=0.69x
1
-2SDV=-0.14x
10
-1SDV=9.56x
-2SDV=-1.47x
Source: Bloomberg, KS
Source: Bloomberg, KS
2015
2014
2013
2012
2011
2010
2009
2008
2004
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
Mean=20.59x
-10
-1
2002
20
2007
+1SDV=31.63x
2006
+2SDV=42.66x
2005
2001
2014
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
-15
2001
-2SDV=3.57x
2001
-2SDV=-5x
-5
-1SDV=12.12x
2013
-1SDV=7.28x
2012
15
Mean=20.67x
2011
Mean=19.56x
2010
25
+1SDV=29.22x
2009
+1SDV=31.84x
2008
35
2007
45
+2SDV=37.78x
2006
+2SDV=44.12x
2005
55
PER
2004
45
40
35
30
25
20
15
10
5
0
2003
PER
65
2002
PBV
2.5
PBV
7
6
2.0
5
4
+2SDV=3.39x
+1SDV=2.35x
1.5
Mean=1.31x
1.0
-1SDV=0.28x
-2SDV=-0.76x
-1
0.0
2012
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
+1SDV=1.52x
Mean=1.26x
-1SDV=1x
-2SDV=0.75x
0.5
-2
Source: Bloomberg, KS
19 June 2015
+2SDV=1.77x
2013
2014
2015
Source: Bloomberg, KS
Tourism Sector
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19 June 2015
Tourism Sector