Stocks to benefit from Beijing's move

Stocks to benefit from Beijing's move

Travellers queue at a check-in counter operated by Air Asia at Don Mueang airport.
Travellers queue at a check-in counter operated by Air Asia at Don Mueang airport.

Stocks in the tourism, aviation and pharmaceutical sectors are the major beneficiaries of China's announcement to allow group tours to visit 20 countries effective as of Feb 6, analysts said.

Daol Securities recently raised its forecast of Chinese tourists arriving in Thailand in 2023 to five million from the two million it forecast earlier. The brokerage also lifted the target of international arrivals from 22 million to 25 million.

Prior to the pandemic, 11 million Chinese tourists visited Thailand, accounting for 25% of total international arrivals in 2019.

Thanks to China's recent reopening, several Thai companies will report higher revenue this year, especially those in the tourism-related industries, namely Asia Aviation (AAV), Erawan Group (ERW), Bangkok Aviation Fuel Services (BAFS), Airports of Thailand (AOT), Central Plaza Hotel (CENTEL), Ekachai Medical Care (EKH), WHA Corporation (WHA), Mega Lifesciences (MEGA) and Siam Wellness Group (SPA), Daol said in its research.

AAV, for example, will benefit from the expected increase in flights from the mainland as more Chinese tourists land in Thailand, it added.

Srinanaporn Marketing (SNNP) will also get a boost as the snack manufacturer supplies to all AirAsia flights starting this month together with 600 branches of 7-Eleven in tourist destinations. About 8% of its revenue is generated from Chinese tourists.

MEGA, which produces pharmaceutical and personal health products as well as medicinal supplements, has been benefitting from the increasing number of Chinese tourists visiting since Jan 8, especially in terms of Covid medicines and vitamins.

Prior to the pandemic, Chinese tourists bought various medicines produced in Thailand such as inhalers, herbs, vitamins and foods.

ERW and SPA will benefit from higher revenue from Chinese tourists in the hotel and wellness sectors. BAFS will gain from an increase in aircraft refuelling as 10-15% of the firm's revenue comes from flights serving China.

For AOT, the proportion of revenue from Chinese tourists is about 15% under normal circumstances. Meanwhile, CENTEL would have 10% more revenue from Chinese tourists.

EKH will benefit from higher demand among visitors for in-vitro fertilisation (IVF). In the past, Chinese tourists contributed about 10% to the company's revenue. Daol expects that there will be 300 couples in search of IVF treatment this year, projecting that Chinese tourists will return to use such services from the second quarter.

WHA will benefit from Chinese investors travelling to Thailand, plus higher presales and transfers for sales of its factories and warehouses.


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