THAILAND'S transport sector is set to benefit from the gradual resumption of normality as well as advancements in developing the country's transport lines, said UOB Kay Hian (UOBKH) in a research note on Thursday (Jun 23).
Analyst Waritthorn Kaewmuang noted that traffic volume and ridership have seen a sharp recovery in May as average expressway traffic volume was up 6.5 per cent month on month, while average ridership on the MRT Blue Line and core Green Line rose 28 and 30 per cent respectively, month on month.
He expects the recovery trajectory for Thailand's transport sector to continue on the back of higher international tourist traffic, the removal of Covid-19 test requirements for entering certain places, as well as more outdoor activities and face-to-face arrangements.
Additionally, he believes rising petrol prices will lead to more people switching to public transport, thereby giving Thai transport firms a shot in the arm.
The brokerage has maintained its "buy" call on Bangkok Expressway and Metro with a target price of 9.90 baht on "outstanding earnings growth" in Q2 2022 as well as "higher competitive advantage in the MRT Orange Line bidding".
Separately, Kaewmuang has reiterated its "buy" call on BTS Group Holdings, which owns BTS Skytrain, with a target price of 10.20 baht, given higher public transport ridership and expectations of a recovery in advertising income from businesses.
He also noted the positive progress on the Green Line dispute, which may well contribute to upside factors for BTS Group.
However, the analyst is cautious on the risks in the sector such as delays in the bidding of new projects, economic slowdown and a higher finance cost from borrowings for new investments under the rising interest rate environment.