DBS Bank reaffirmed its “BUY” recommendation for The Erawan Group Public Company Limited (SET: ERW), emphasizing that its budget hotel segment is expected to bolster performance throughout 2025. In the first quarter of 2025, the company’s core profits surged by 19%, marginally exceeding both market predictions and DBS’ own forecasts.
A substantial contributor to this growth was the increase in Average Daily Rate (ADR) for its non-budget hotel sector. Meanwhile, the Hop Inn brand recorded robust revenue growth fueled by ongoing expansion efforts. Although RevPAR (Revenue Per Available Room) growth is anticipated to decelerate in the second quarter of 2025, the expanding footprint of Hop Inn is projected to sustain revenue growth.
DBS maintains its “BUY” rating on ERW, keeping their target price steady at THB3.40, supported by a Discounted Cash Flow (DCF) valuation methodology.
ERW reported its 1Q25 earnings results yesterday with total revenues reaching 2,136 million baht, reflecting an increase of 7% YoY. Meanwhile, a normalized net profit was at 345 million baht, a 21% YoY increase.
The extra items in 1Q24 totaling 132 million baht including the share of profit of associates accounted for using equity method and the net difference of right-of-use assets and lease liabilities resulting from lease modification. The company recorded a net profit of 345 million baht, a 17% decline from 417 million baht in 1Q24.
