Thailand-China visa-free deal to boost Chinese tourist influx by 57%

The visa-free arrangement between Thailand and China, effective from March 1, is predicted to cause a 57% surge in Chinese visitors this year, boosting the total foreign arrivals to 33 million. Analysts suggest this development offers an opportunity for investors to gradually accumulate travel stocks.

Thai Prime Minister Srettha Thavisin announced the reciprocal visa-free scheme on Tuesday, January 2, following Thailand’s decision to waive visas for Chinese tourists until February.

In a research note, Daol Securities stated that tourism stocks, particularly hotels, are likely to be the most significant beneficiaries of this pact. Prominent suggestions include Erawan Group (ERW), Central Plaza Hotel (CENTEL), Minor International (MINT), and S Hotels and Resorts.

This is the first time China granted visa exemptions to Thai tourists, Daol noted. The firm also anticipates that aviation stocks like Asia Aviation (AAV), Airports of Thailand (AOT), and Bangkok Aviation Fuel Services will benefit from the dual measure.

The brokerage set a target price for AAV at 2.70 baht, considering that Chinese tourists make up 25% of the airline’s clientele. It has also proposed a recommended price for AOT at 79.00 baht, predicting a growth in profit for the first quarter of this year on both a year-on-year and quarter-on-quarter basis.

Daol Securities advises investors to buy ERW at 6.50 baht, as 88% of the company’s income stems from domestic hotels, with Chinese tourists contributing 12% of the revenue.

MINT’s target price is set at 40 baht, based on the income per available room in October and November, which continued to grow well despite the low season in Europe. The company’s profit for the fourth quarter of 2023 is projected to grow both yearly and quarterly.

On the other hand, Trinity Securities recommends buying ERW at 6.60 baht per share and CENTEL at 48.75 baht. The firm favours ERW, as its revenue from domestic hotels is as high as 90%.

While CENTEL receives approximately 80% of its revenue from domestic hotels, more than 30% of its total income is generated by Chinese tourists. CENTEL’s restaurant business is also expected to flourish with the increase in tourist numbers.

Trinity estimates that there were 28 million foreign arrivals last year, slightly higher than the forecast of 27.5 million and a significant increase from 11 million in 2022. This year, foreign arrivals are projected to reach 33 million, marking an 18% rise from 2023. The number of Chinese tourists is expected to hit 5.5 million, a 57% boost from 3.5 million last year, reported Bangkok Post.