Recovery ongoing

KGI Securities has reiterated its ‘buy’ call and 41.5 cents target price on luxury resorts operator Banyan Tree Holdings, on the premise that tourism recovery is ongoing.

In 1HFY2023 ended June, the company reported a core operating profit of $18.7 million, up from $11.1 million recorded in the year-earlier 1HFY2022. Revenue in the same period was up 21% y-o-y to $143.7 million, led by higher RevPar of 64%.

In a recent development, Thailand, in a bid to draw more visitors to help offset weakness in its export sectors, will temporarily waive tourist visa requirements for visitors from China and Kazakhstan from Sept 25 to Feb 29 next year.

“The tourism industry is optimistic that the visa-free scheme will be a success and boost tourism spending in Thailand. This would also benefit businesses such as Banyan Tree, which has multiple properties in the country,” states KGI.

Separately, Banyan Tree, Ennismore and Dubai Holding have partnered to open a new Banyan Tree hotel in Dubai, replacing the existing Caesars Palace Dubai on Bluewaters Island. This new hotel, with 179 rooms, will be run jointly by Banyan Tree and Ennismore and will open in November.

According to KGI, this is the first of many hotel and brand development projects that Accor (a strategic partner of Banyan Tree) and Dubai Holding are working on.

Company chairman Ho Kwon Ping has indicated that while China’s mass market is taking longer to recover, the impact is relatively small on his company given its premium positioning.

“He is also confident that the Chinese real estate market will not collapse, as the banking system is strong. Additionally, he mentioned that Banyan Tree’s exposure to the Chinese real estate bubble is not large due to the sale of a few hotels in China before the bubble,” adds KGI. —