On Tuesday at 10:44 AM (Bangkok time), the share price of The Erawan Group Public Company Limited (SET: ERW) surged by 1.57% or THB 0.04 to THB 2.58, with a trading value of THB 17.37 million.
Kiatnakin Phatra Securities (KKPS) projects ERW’s core profit for 3Q25 to decrease by 45% year-on-year to THB 69 million, reflecting sustained weakness in the hospitality sector amid soft tourist arrivals. The broker expects non-Hop Inn RevPAR to slide 10% year-on-year, largely due to a 7% drop in average daily rates (ADR). The Economy and Luxury segments are anticipated to weigh on performance, with RevPAR declines of 15% and 12% year-on-year, respectively.
Conversely, the Hop Inn portfolio is forecast to show resilience, with like-for-like RevPAR rising 2% year-on-year and 12% growth in room count. Revenue from Hop Inn Thailand and the Philippines is expected to climb 15-17% and 4-6% year-on-year, respectively. However, Hop Inn Japan’s revenue could soften by 2-3% owing to a stronger Thai baht against the yen and lingering effects from July’s earthquake.
Overall, ERW’s total revenue for 3Q25 is projected to decline by 5% year-on-year, with an EBITDA margin dipping to 28%, down from 30% a year earlier. The company is also set to record a one-off expense of THB 17-19 million for hotel repairs in Cebu after the earthquake, lowering net profit to THB 51 million for the quarter.
Looking ahead, RevPAR is forecast to recover to flat year-on-year in the fourth quarter. Occupancy rates (OCC) for November and December are expected to reach 80-85%, matching levels from 4Q24. KKPS anticipates a substantial sequential improvement in Q4 core profit, with potential upside if short-haul travelers boost bookings closer to their stay dates.
Following these, KKPS has trimmed its 2025-2027 core profit estimates for ERW by 1-5% and moved its DCF valuation forward to 2026, resulting in a new price target of THB 3.20 per share. The brokerage firm reiterates a ‘Buy’ recommendation, noting that ERW’s operations appear to have bottomed, and the stock trades at an attractive 13x 2026E P/E, significantly below its 10-year average of 22x.
