MBKET Expects Thailand’s Tourism to Fully Recover by 2024 amid Resurgence of Covid-19

Thailand’s tourism stocks were among the group that saw a huge impact from the report of Covid-19 omicron variant on Friday as the negativity extended into Monday before starting to ease on the following day. The positive sign of recovery came to a halt on the uncertainty amid the new variant that was primarily reported with a higher transmission rate than the delta variant.

On November 30, 2021, Moderna’s CEO in an interview with Financial Times predicted that existing vaccines will be much less effective against omicron than earlier strains and warned that it would take months before drugmakers can manufacture new variant-specific vaccines at scale. Bancel also suggested that the current vaccines may need to be modified next year due to the high mutation of the virus.

Global market reacted negatively to the report.


Maybank Kim Eng Securities (Thailand) (MBKET) stated that several cases of the new Covid variant, dubbed Omicron, have been identified in Europe. Many countries, including Thailand, are re-imposing quarantine for those returning from South African countries or travel bans. While there may be few tourists from these African countries, the spread into Europe is a concern, because if significant, Thailand may have to impose travel bans on European countries as well. This could be a downside risk as Europeans accounted for 59% of Thailand’s international tourists on October 21.

Additionally, if Omicron spreads globally, in the worst-case scenario, Thailand may have to shut down its borders. Currently, MBKET does not think this will happen and its estimates do not factor in any hiccups in recovery.

MBKET expected Minor International Public Company Limited (SET: MINT) to be the most impacted by the resurgence of Covid in Europe as nearly half of its revenues are from Europe. For Airports of Thailand Public Company Limited (SET: AOT) and Asset World Corp Public Company Limited (SET: AWC), all their revenues are from Thailand, while for The Erawan Group Public Company Limited (SET: ERW), about 96% of revenues is from Thailand and should be impacted by the new strain, if Thailand has to impose travel bans on major European countries.

The securities company expected Central Plaza Hotel Public Company Limited (SET: CENTEL) to be the least impacted as about 60% of total normalised revenues are from the restaurant business, which is more resilient and domestic-driven.

MBKET noted that it does not expect Thailand to have another lockdown, as the securities company thinks the country may deal with the new strain by shutting down the borders first (in the worst-case scenario) and this could be enough to contain infections and hence, a lockdown locally may not be necessary. For this reason, MBKET stated that it thinks the restaurant business will be less impacted than the hotel business.

In addition, MBKET expected the number of overseas visitors to Thailand to bottom out in 2021E at just 0.4 million arrivals, and recover to 9 million in 2022E and not rebound to 40 million until 2024E (pre-Covid level in 2019). Its forecasts are in line with AOT’s passenger forecasts. Given the slow recovery and deep FY22 losses forecast, MBKET maintained a NEGATIVE view on the sector.