Kiatnakin Phatra Securities (KKPS) has revised its outlook for Thai Airways International Public Company Limited (SET: THAI), cutting its target price to THB 8.40. The updated target is based on a 2026 target P/E of 10.8x and EV/EBITDA of 4.7x, both below the regional peer averages, due to potential selling pressure from creditors who converted debt to equity.
KKPS expects THAI’s 1Q26 core profit to decline 15% year-on-year to THB 8.6 billion but rise 27% quarter-on-quarter. The net profit is anticipated at THB 9.2 billion, a 6% decrease YoY but a notable 103% QoQ jump, reflecting a THB 400 million net FX loss, derivative gains, and a THB 1 billion gain from the termination of aircraft lease agreements.
The reduced performance expectations are attributed to a projected 4% YoY drop in passenger volume and a 2% YoY decrease in available seat kilometers (ASK), while load factor and yield are expected to remain flat YoY. Strong load factor on European routes during March, lifted by disruptions in Middle Eastern airlines, provided a temporary boost.
Fuel expenses are set to fall 8% YoY amid lower consumption, but non-fuel costs will increase 4-5% due mainly to higher employee benefits and depreciation. Interest expenses will drop 13-15% due to debt restructuring, but a higher tax rate of 10-15% is expected, compared to zero in 1Q25.
THAI increased ticket fares in response to higher jet fuel prices, resulting in a passenger yield rise of 9% in 1Q26 and 14-16% in April versus 4Q25. However, forward bookings for May and June have dropped by mid-single digits, prompting the airline to trim ASK and manage demand accordingly. KKPS warns that further fare hikes may suppress demand and lower load factors.
The brokerage maintains a ‘Neutral’ view, citing uncertainties from ongoing geopolitical conflicts and the expiry of share lock-up restrictions for creditors in August 2026. Nonetheless, KKPS highlights potential upside if earnings improve as conflicts ease.
