What you need to know about the SG market 

#whatstrending feat. Beansprout

Ever wondered what is currently driving the local and regional markets? #whatstrending is a new series addressing some of the most trending questions/topics on the markets for investors. Designed to be educational, expect to get factual information on what is driving sectors and stocks listed on SGX, featuring insights from professionals in the community.

Today, we hear more from Beansprout, a MAS-licensed investment advisory platform offering expert insights on Singapore stocks, REITs, ETFs and bonds. Gerald Wong, founder and CEO, shares his thoughts on market developments.

Q:  Given the rise in international travel once more, how have some of our neighbouring countries benefitted in recent months? Is it time for a recovery in tourism again?

From Gerald, founder and CEO of Beansprout:

According to the UN World Tourism Organisation, international travel has picked up significantly with global air traffic doubling in 2022 compared to levels in 2021. Within Singapore, the Singapore Tourism Board expects our nation to receive 12 to 14 million tourists this year, with full recovery in tourism expected in 2024.

Thailand is no different, with aircraft and passenger movements continuing to improve following the full-reopening, with movements in the fourth quarter of 2022 tracking ahead of the comparable period in previous year, but still below pre-Covid levels.

Further growth could come from an increase in Chinese tourists. The reopening of China would be a key driver of international arrivals as China tourist arrivals made up 33% of Thailand’s total tourism arrivals in 2019. The Association of Thai Travel Agents forecasts that foreign arrivals in 2023 could exceed 30 million, citing the return of Chinese tour groups from February 6.

Q: Airports of Thailand (AOT) operates 6 major airports in Thailand, how can it benefit from Thailand’s tourism recovery?

From Gerald, founder and CEO of Beansprout:

AOT operates 6 major airports in Thailand. This includes 2 airports in Bangkok - Suvarnabhumi Airport (BKK), Don Mueang International Airport (DMK) and 4 at regional sites - Chiang Mai International Airport (CNX), Hat Yai International Airport (HDY), Phuket International Airport (HKT) and Mae Fah Luang - Chiang Rai International Airport (CEI). Across its airports, AOT has a total passenger capacity of about 101 million per year. Bangkok airports Suvarnabhumi (BKK) and Don Mueang (DMK) have a combined capacity of about 75 million passengers per year.

AOT’s airports account for over 80% of Thailand’s air traffic. There are a total of 39 airports in Thailand, and most of the other airports are smaller in scale and owned by the Department of Civil Aviation (DCA), Royal Thai Navy, and Bangkok Airways Public Company Limited. AOT airports handled a total number of 46.69 million passengers in FY2022, comprising 13.90 million international passengers and 32.79 million domestic passengers. This was more than double the total number of passengers from the previous year.

AOT’s revenue has recovered with higher air traffic. AOT generates a sizable portion of its revenue from aeronautical services, including departure passenger service charges across both international and domestic flights. It also generates revenue from non-aeronautical services, including concession fees from duty-free and souvenir stores at its airports. AOT’s revenue grew to 19.9 billion Thai Baht in the first half of fiscal year 2023 (ending March 2023), driven by a recovery in passenger traffic in its airports. In particular, passenger service charges grew to THB 8.3 billion from THB 1.2 billion in the previous year with the higher number of flights at its airports. With the higher revenue, AOT generated a net profit of THB 2.2 billion in the first half of FY2023, reversing from a loss of THB 7.5 billion in the previous year.

The AOT Thai Singapore Depository Receipt (SDR) trades on the SGX under the stock code TATD, in Singapore dollars and the same SGX trading hours apply.

For a more detailed analysis on Airports of Thailand, read the full report here.

For more details on SDRs, read here.

For more insights on Singapore stocks, REITs, ETFs and bonds, visit growbeansprout.com.