Equities related to tourism see sell-off
Hotel stocks face B12bn loss this year
Tourism-related stocks were sold off to take profit on Wednesday following the first shipment of Covid-19 vaccines to the country in what analysts are calling "selling on fact", after speculation in advance of shipment caused shares to surge over the past few weeks.
Analysts believe tourism-related stocks including hotel operators, airlines, airports and hospitals will face a loss of at least 12 billion baht this year, likely not seeing profits until 2022.
Asia Aviation (AAV) shares, among the top 10 in trading volume, fell 0.74%, down 0.02 baht to close at 2.68 baht.
Airports of Thailand (AOT) has climbed from about 60 baht at the end of January to close at 63.50 baht on Wednesday.
Central Plaza Hotel Plc (CENTEL) also ascended to a year-high of 33.25 baht on Tuesday, then closed on Wednesday at 32.25 baht, down by 2.27%.
Kavee Chukitkasem, assistant managing director of Kasikorn Securities, said investors are taking profits after prices of tourism-related stocks spiked rapidly to near pre-Covid levels following the news of vaccine imports.
"Tourism-related stocks responded to the vaccine shipments. Little upside remains -- beware of profit-taking sales," Mr Kavee said.
Thanadech Rungsrithananon, senior vice-president of UOB Kay Hian Securities, said tourism-related sectors will improve significantly from last year, but will not post profits until the return of foreign tourists.
"The challenge for the government is how to increase tourists' spending and help businesses survive during this trying time," he said.
An analyst at Capital Nomura Securities (CNS) who requested anonymity said hotel share prices have risen recently following vaccine shipments, sparking hope for the return of international arrivals.
However, the fundamentals of hotel shares remain unchanged as the number of tourists likely will not rebound until the third quarter, recovering significantly in the fourth quarter when the majority of the world population has been vaccinated.
Tourism-related stocks will continue to dip this year, only becoming profitable in 2022, the analyst said.
In 2021, CNS predicts Minor International (MINT) to lose 10 billion baht, CENTEL 1.1 billion and Erawan Group (ERW) 1 billion.
"However, we still see tourism-related stocks in bullish territory and select MINT as our top pick," said the CNS analyst.
Asia Plus Securities (ASPS) said the government is preparing to lift the lockdown, starting from Bangkok and running to perimeter areas, with plans to attract foreign tourists who have been vaccinated in the third quarter.
Mass vaccination is another factor supporting investment in the market, said the brokerage.