CGSI recommends overweighting tourism sector, expects strong profit growth in the second half of 2026 and in 2027

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The research team at CGS International Securities (Thailand), or CGSI, recommends increasing investment weight in Thailand's tourism sector, viewing profits as likely to grow strongly in the second half of 2026 and in 2027, and prefers THAI over AOT because THAI's valuation is more attractive at a 2027 P/E of 6.9 times, which is 27% below the sector average, compared with AOT at a 2027 P/E of 27.6 times, which is 48% above the sector average, and its earnings also have higher upside. For the fourth quarter of fiscal year 2026, or July to September 2026, CGSI estimates that AOT will post normalized profit rising to 4.4 billion baht, up 9% year on year and 16% quarter on quarter, even though passenger numbers fell 2% year on year, as the increase in the departure passenger service charge, or PSC, helps support earnings. Meanwhile, THAI is expected to post normalized profit of 2.8 billion baht in the third quarter of 2026, down 48% year on year but up 138% quarter on quarter, marking a recovery from its low point in the second quarter of 2026, supported by a 17% decline in average jet fuel prices. Passenger numbers remain AOT's weak point, as foreign tourist arrivals in Thailand during July to September 2026 are expected to fall 5% year on year from 7.43 million to 7.03 million, because airlines worldwide continue to cut flights, especially low-cost carriers, which are highly sensitive to prices. CGSI estimates that net profit at AOT and THAI will grow 60% year on year and 24% year on year respectively in 2027. In AOT's case, most of the growth will come from full-year recognition of the benefits of the increase in the PSC for international passengers, which is seen as a one-time boost to profit growth since the PSC is unlikely to be reviewed again for at least four years. THAI, meanwhile, is upgrading its service quality, and the delivery of 14 Airbus A321neo aircraft and 12 Boeing 787 aircraft will expand its fleet from 84 aircraft at the end of the second quarter of 2026 to 102 aircraft by the end of December 2026.

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Industrials▲ · 2 stocks
Airports Of Thailand PCL
AOT
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CGSI recommends overweighting tourism and estimates AOT's normalized profit rising 9% y/y in Q4 FY2026 and 60% y/y in 2027, though it prefers THAI over AOT on valuation.

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