CGS-CIMB Suggests “BUY” on MINT and AOT ahead of Long Holiday Season in 2H23

CGS-CIMB Securities published an analysis on companies in the hotels and tourism related industry, suggesting “BUY” on MINT and AOT as the global travel recovery continued with stronger demand in the second half of the year ahead of the long holiday season.

In 2Q23, Minor International Pcl. (SET: MINT) reported record core profit of THB3.0 billion, representing a 148% YoY increase from 2Q22 and was 52% above pre-COVID 2Q19. The results reflected continued global recovery momentum in both hotel and restaurant sectors post-COVID.

The brokerage firm noted that the results exceeded market expectations by 12%, therefore it opted to maintain its “BUY” rating and THB41.0 price target on MINT shares, as well as its forecast for 2023 earnings per share (EPS), even though the first half of the year only accounts for 26% of the full year as it expects 2H to grow HoH as 3Q is EU peak season and 4Q is Thai peak season.

MINT’s occupancy rate increased to 70% in 2Q23 from 66% in 2Q22, while the hotel’s revenue per available room (RevPAR) increased to THB4,118 (+28% YoY, +50% QoQ). The EBITDA margin for hotels increased from 30.5% in 2Q22 to 32.9% in 2Q23.

In the restaurant business, SSSG increased by 8.1% YoY in 2Q23, while TSSG increased by 17.5%. Due in large part to high base effects in 2Q22, momentum has slowed since 1Q23. 

CGS-CIMB also maintains a “BUY” recommendation on shares of Airports of Thailand Pcl. (SET: AOT), with a target price of THB78.0, following a better-than-expected 3Q23 earnings result of THB3.16 billion, compared to a net loss of THB2,207.19 million in the same period last year. 

Between January and March of 2023, there was a modest decrease in total passenger numbers (pax), from 26.4 million to 24.7 million. In spite of lower seasonal demand, foreign pax was steady at 13.7 million (-2% QoQ), helped in large part by a +79% QoQ increase in the number of Chinese tourists.

Concession revenue per passenger jumped 50% QoQ to THB305/pax.

The brokerage firm believes that an increase in AOT’s passenger service fee (PSC) will provide the company’s earnings with their next boost over the medium term. There has been no change to AOT’s PSC since 2006. With the assumption that new PSCs will be implemented as early as 2025, CGS-CIMB has estimated an increase in PSCs from THB700/THB100 to THB900/THB150 for international/domestic routes beginning in 2026.