We have upgraded our investment weighting for the tourism sector from Neutral to Outperform. This decision is driven by the robust recovery in tourist arrivals to Thailand, particularly from key markets like Russia, India, and Europe. These markets have surpassed pre-COVID levels by a significant 104-120%. Additionally, the anticipated inflows of Chinese tourists further bolster the sector’s outlook. To reflect this positive trend, we have revised our 2024E and 2025E tourist arrival estimates upward by 6% and 3% to 36mn (+28% YoY) and 39mn (+8% YoY). However, we maintain our Chinese visitor estimates for the respective periods at 6.5mn and 8.0mn. Beyond Thailand, countries like Japan and the Maldives are also well-positioned to capitalize on the high tourism season in the final and first quarters of years.

Despite the upgraded tourist arrival projections, we maintain our core profit estimates for 2024E and 2025E Bt9.95bn (+12% YoY) and Bt11.19bn (+13%). This follows the earlier upward adjustment in CENTEL’s core profit projections by 3-5% over the same periods. We anticipate CENTEL to lead the sector in 4Q24E with the highest RevPAR growth of +10% YoY, followed by SHR (+7%) and MINT and ERW (+5%).

SETTOURISM has outperformed the benchmark index by 3% over the past month, primarily driven by the strong tourism season. Despite this outperformance, the sector’s current valuation remains below the pre-COVID level. Our top picks within the sector are CENTEL (BUY, target price of Bt44.00) and MINT (BUY, Bt34.00). CENTEL is poised to deliver the highest core profit in 2025E, and its current valuation of 11.7x 2024E EV/EBITDA appears more attractive than ERW’s 14.6x. MINT, on the other hand, offers a valuation advantage with a 2024E EV/EBITDA of 10x (-2.0 SD). Additionally, MINT’s 4Q24E core profit is expected to benefit from the high season contributions of its Thai and Maldivian operations, as well as its planned REIT to mitigate earnings volatility.