Cheers To Thailand’s Reopening

Thailand’s government plans to reopen the country’s international borders to 10 countries in a bid to revitalise its battered tourism sector. The authorities are also considering lifting Thailand’s ongoing alcohol ban in restaurants. With the arrival of vaccinated tourists, we think this would help boost alcohol consumption and volume in Thailand. In our view, this remains largely underappreciated by the market given ThaiBev’s attractive valuation. Maintain BUY with a target price of S$0.92.

WHAT’S NEW

Partial reopening of international borders. Thailand’s government has revealed plans to reopen Thailand’s international borders to 10 countries in a bid to revitalise Thailand’s battered tourism sector. From 1 Nov 21, vaccinated travelers from 10 “low risk” countries would be allowed to enter Thailand without the mandated 7-day quarantine currently in place. Vaccinated foreign
arrivals from these countries would need a negative pre-departure PCR swab test from their country of origin and once again upon their arrival in Thailand. Upon which, vaccinated travelers are then allowed to roam within the country. Some countries on the list include the US, Germany, the UK, China and Singapore. It was noted by Thailand’s prime minister that the list of countries may be expanded in Dec 21 and Jan 22 depending on the success of the initial phase of reopening.

Expected lifting of alcohol ban. Aligned with the reopening of international borders, Thailand’s government has also confirmed that authorities are considering lifting Thailand’s ongoing alcohol ban in restaurants by 1 Dec 21 to boost the tourism sector and in time for the new year celebrations. Furthermore, bars and nightlife venues could also reopen as more tourists arrive due to the new relaxed travel restrictions. Currently, with the exception of Phuket, consumption and the sale of alcohol are banned in restaurants while bars and nightlife entertainment venues have been ordered to close to prevent a potential spread of COVID-19 infections.

Phuket first, Thailand next. We expect Thailand to reopen with the same rules imposed in Phuket in Jul 21. Thailand’s Centre for COVID-19 Situation Administration (CCSA) also approved the order for the sale and consumption of alcohol in restaurants for Phuket from Oct 21 onwards. In order to qualify for the alcohol consumption scheme, some guidelines that restaurants have to
abide to include employees and patrons being fully vaccinated while operating at a lower capacity to maintain social distancing. Tourist arrivals into Phuket have increased significantly after allowing vaccinated tourists to enter quarantine-free. As Thailand prepares to open up further to vaccinated tourists, we think Thailand’s authorities would uniformly impose similar measures
nationwide which would help support alcohol sales and the country’s devastated tourism sector.