Broker's take: Companies in Thailand with domestic exposure likely to gain more from reopening trend

COMPANIES in Thailand will likely benefit from a general reopening trend, although companies with a larger domestic exposure should stand to gain more, UOB Kay Hian (UOBKH) said.

In a report on Monday, the research team expects Thailand will continue to rely on domestic spending until at least the second quarter of 2022 due to its slow vaccination rate, assuming it hits a 70 per cent level by Q1.

UOBKH also expects the government's tourism stimulus packages will pave the way for local recovery in Q4 2021 amid pent-up demand for domestic travelling, and estimates them to be worth 11 billion baht (S$442.9 million).

Although the slow vaccination rate may delay plans, a lifting of lockdown measures in September and the plan to reopen popular tourist destinations by Q4 2021 should encourage travel within the country and boost stock market sentiment, the research team said.

UOBKH added that the market has likely already priced in the reopening theme across the board, thus it prefers stocks that will benefit more from domestic reopening in the near term, as well as those which have lagged in the reopening play.

In the banking and finance sector, it recommends Kasikornbank, as domestic reopening will likely boost local consumption and increase private investments. Lender Ngern Tid Lor should also benefit from an improved borrowers' income, as normal business operations resume post-reopening.

In the retail and property sector, Home Product Center should gain from the reopening of its retail stores that were temporarily closed in high-risk areas. Meanwhile, property manager and developer Central Pattana should see higher foot traffic at its malls.

As for CPN Retail Growth Leasehold Reit, it should see a significant improvement in its earnings since 90 per cent of its assets rely on domestic demand.

Additionally, Central Plaza Hotel's hotel and restaurant businesses should recover with the reopening since 90 per cent of its pre-pandemic revenue contribution was from Thailand.

In the healthcare sector, Bangkok Dusit Medical Services - which saw 70 per cent of its pre-Covid-19 revenue from Thai patients - will benefit from having more patients who have minor illnesses and are afraid of visiting hospitals during the lockdown.

For the construction sector, Sino Thai Engineering and Construction will likely gain from the resumption of round-the-clock construction activities and more migrant workers. More mega projects may also be put on bids as state enterprises would have more time for meetings to approve the bidding process.

In the telco sector, UOBKH prefers Advanced Info Service, as improved economic activities will likely boost overall consumption, and consumers may upgrade their mobile price plans.

Meanwhile, Bangkok Expressway and Metro will likely gain from improved metro ridership, office reopenings and the upcoming bids for new metro lines. However, the research team noted that the reopening may have already been substantially priced in.

As for the utilities segment, Gulf Energy Development will likely see demand recovery from industrial users, and be the biggest gainer among small power plant operators as it should be less affected by higher gas and coal costs.

READ MORE: Uncertainty remains despite signs of recovery for Thailand: economists