Maybank Securities (Thailand) has reiterated its ‘Buy’ rating for The Erawan Group Public Company Limited (SET: ERW), with a target price of THB 3.60 per share, viewing the recent 25% share price correction following the onset of the Middle East conflict as an attractive entry opportunity.
ERW is currently trading at just 12 times its projected 2026 earnings, reflecting what Maybank describes as an appealing valuation, with downside risk considered limited due to minimal earnings exposure to the region.
The company’s core profit is expected to reach a record high of THB 402 million in the first quarter of 2026, a 17% increase year-on-year and up 3% quarter-on-quarter, driven by the recovery of revenue per available room (RevPAR) across the economy to luxury segments and robust growth of the HOP INN budget hotel chain. HOP INN’s revenue is forecasted to grow by 10% year-on-year in 1Q26.
While the ongoing Middle East conflict poses potential risks, its direct impact on ERW remains limited. In 2025, ERW generated less than THB 500 million from Middle Eastern tourists, accounting for just 6% of its total revenue, with peak seasonality typically observed in the third quarter. ERW is proactively targeting tourists from Oceania and South Asia to alleviate any shortfalls, while China continues to be a vital source market, contributing 9% of 2025 revenue, aided by the rebound in inbound Chinese tourism.
Additionally, ERW stands to benefit from evolving tourism trends. The Tourism Authority of Thailand (TAT) recently highlighted a shift among European travelers, who are now favoring eastern destinations such as Pattaya—which contributed 14% of ERW’s EBITDA in 2025—over traditional southern hotspots like Phuket, which comprised just 4%.
Looking ahead, ERW has laid out ambitious expansion plans for HOP INN. Management aims to operate 150 HOP INN hotels across Asia by 2030. Should this goal be realized, Maybank estimates an earnings upside of THB 140–150 million, or roughly 10% above its current 2030 projections. The brokerage believes the company’s target for HOP INN to contribute 41% of EBITDA by 2030, compared to 32% in 2025, is achievable, with acceleration in expansion expected post-IPO in 2027.
Notably, the primary risk for ERW remains the pending extension of the land lease contract for the Grand Hyatt Erawan Hotel, which constituted 13% of ERW’s earnings in 2025.
- In its base case, Maybank expects ERW to shoulder an additional THB 100 million annual rental cost, which would impact earnings by an estimated 8% in 2027 based on a 20% revenue-sharing arrangement.
- In a worst-case scenario—where the land lease is not renewed—ERW could see an 11% earnings hit in 2027, amounting to a potential THB 0.40 per share reduction in Maybank’s target price.
