After being battered by pandemic closures, tourism and retail stocks stand to benefit from Thailand's October reopening.
The Tourism Authority of Thailand (TAT) is set to propose a plan to reopen Chon Buri, Chiang Mai, Phetchaburi and Prachuap Khiri Khan on Oct 1.
Bangkok needs more time to fully inoculate 70% of its population, a criteria for the reopening plan, and the capital is slated to be ready by Oct 15.
Asia Plus Securities (ASPS) expects the tourism industry to start recovering from 2022.
The brokerage believes the government's upcoming tourism stimulus measures and progress in vaccination will benefit stocks related to reopening, although the overall stock market may be volatile during the period as the Stock Exchange of Thailand (SET) is considering launching new measures to regulate large-cap stocks in the SET50 and SET100 indices with low free float.
ASPS's picks in these sectors include stocks whose prices have been laggards since the beginning of the pandemic in early 2020, and are likely targets for sector rotation next month.
Of the 27 stocks selected, Airports of Thailand (AOT) and Central Retail Corporation are the broker's top picks in terms of highest prospects for recovery.
After the five provinces are reopened next month, aviation stocks are expected to increase based on positive sentiment from more frequent domestic flights and more passengers, said ASPS.
The brokerage sees AOT as the main beneficiary from the measures because it has three airports operating in provinces being reopened: Bangkok, Chiang Mai and Phuket. All of AOT's airports are reportedly well maintained and in good condition, with 92.9% capacity, said ASPS. As a state-owned enterprise, the organisation also faces less competition, unlike private aviation businesses.
As for Asia Aviation (AAV), even though it has returned to service and is expected to have liquidity from presales of tickets, sales of aircraft, and leasebacks, the company is still in the process of raising new funds from a crowdfunding scheme through the Peerpower platform, said the brokerage.
Investors should monitor the success of the fundraising before investing as the company is undergoing a major restructuring to its capital base, said ASPS. Moreover, there are still concerns about the liquidity of Thai AirAsia (TAA), a subsidiary of AAV, after it underwent a major capital restructuring due to TAA's huge losses during the latest wave of the pandemic.
Bangkok Airways is also expected to face losses in the third quarter from the cancellation of the Samui Airport lease agreement by the Samui Airport Property Fund.