FSSIA keeps “BUY” rating on CPN, with earnings expected to benefit from Thailand reopening

Thailand is one step closer to fully reopening its border, as it announced the scrapping of Thailand Pass requirement for incoming travelers from July 1, aiming at boosting Thailand’s major tourism industry, which has been severely impacted by the Covid-19 pandemic.

Mr. Suwat Sinsadok, Managing Director of FSS International Investment Advisory (FSSIA), recommends “BUY” on Central Pattana Pcl. (SET: CPN) and upgrades a target price from THB82.00 to THB85.00, stating CPN as one of the most attractive domestic plays to capture the benefits of the economic reopening and the return of tourists.

CPN’s net profit is projected to increase at a compound annual growth rate (CAGR) of 64% between 2021 and 2024, from THB3.4 billion in 2021 to THB16.9 billion in 2024, as a result of three key factors: 1) The rental business expansion with new shopping malls, improving margins, and higher occupancy rates for offices and hotels due to an increase in the number of tourists. 2) The effective cost control to reduce the proportion of variable costs. 3) The THB24.2 billion acquisition of a 99.73 percent ownership in Siam Future Development (SF TB, delisted) on May 22; FSSIA forecasts that this will increase CPN’s net profit by THB0.8-1.2 billion, or 30-40%, annually in 2022-24.