KGI Securities (Thailand) disclosed that The Erawan Group Public Company Limited (SET: ERW) reported a net profit of THB 376 million for 1Q26, up 9% year-on-year and 1% quarter-on-quarter, closely aligning with expectations from both the securities firm and Bloomberg consensus.
The result included a one-time expense of THB 13 million due to early debt repayment. Excluding this, core profit stood at THB 388 million, representing a 13% YoY and 4% QoQ growth, and accounting for 41% of KGI’s full-year 2026 forecast.
The year-on-year improvement was driven by higher revenue from increased revenue per available room (RevPAR), room expansion, improved margins, and lower interest expenses. Total revenue for 1Q26 rose 5% YoY to THB 2.24 billion, with hotels from the budget to 5-star segments—contributing 75% of revenue—showing 4% RevPAR growth on higher occupancy (86.6% vs 83.4% YoY), though average room rates were stable. Hop Inn contributed THB 524 million (+5% YoY), supported by 10% growth in room count and higher occupancy.
EBITDA margin expanded to 37.2% (from 36.9% YoY), aided by continued revenue growth and effective cost controls, while interest expenses dropped 4% YoY due to ongoing deleveraging.
Forward bookings for 2Q26 remain positive, with occupancy rates stable above 75%—up from 72% in 2Q25—thanks to strong demand from East Asian tourists and significant domestic/short-haul traveler demand, mitigating risks from weaker long-haul markets.
KGI maintains its 2026 core profit forecast at THB 910 million (+8% YoY), expecting continued profit growth on the back of high occupancy and a favorable customer mix. Key risks include: slower travel demand that could pressure occupancy, average rates, and lead to higher-than-expected costs.
Despite a 24% YTD share price correction due to geopolitical concerns, ERW now trades at 8.9x 2026F EV/EBITDA and 1.4x PBV, below historical averages, implying much of the downside has already been priced in. KGI reiterates a “Buy” rating on ERW with a target price of THB 3.20.
