Company Coverage
The Erawan Group (ERW TB): Improving Outlook In 3Q26 On Strong Booking Demand
BUY (Maintained)
Current price:
Target price:
Upside:
Bt3.64
Bt4.40
+20.9%
Analyst
Highlights
- We attended ERW’s analyst meeting to review its 2Q26 results and the tone was positive.
- We see an improving outlook in 3Q26, mainly driven by strong booking demand of economy to luxury portfolio which drives up the ADR.
- We remain optimistic about ERW, and it remains one of our top picks in the hotel sector. We see more supporting factors in 2H26 such as strong booking demand, the declining interest cost, the reopening of Naka Phuket and the large events in 2H26. Maintain BUY with a target price of Bt4.40.
Analysis
- Positive tone from the analyst meeting. We attended The Erawan Group’s (ERW) analyst meeting to review its 2Q26 results and the tone was positive.
- Strong outlook in 3Q26. The management provided ERW’s 3Q26 guidance, expecting 3Q26 room revenue to show a strong growth yoy of 7%. Meanwhile, RevPar for the whole portfolio is expected to show 2% yoy growth, with main contribution coming from economy to luxury hotel portfolio. The key drive in 3Q26 is expected to be from the rising average daily rate (ADR), driven by strong booking demand. Middle East guests who come for medical treatment are the notable contributors in 3Q26, which is the traditional high season of Middle East arrivals. The demand from Middle East guests in Aug 26 was very strong and exceeded ERW’s expectations. Hence, we expect 3Q26 to be a gradually improving quarter for ERW as we have seen that the impact from Grand Hyatt renovation is manageable.
- Declining interest costs to support earnings. Following management’s plan to refinance part of its loans to further reduce interest costs, the prepayment fee incurred in 2Q26 should be the last significant expense under the current refinancing plan. Going forward, ERW should fully benefit from lower interest costs, which are currently at a low level of 2.9% by end-2Q26. Its average cost of funds has declined each quarter, partly due to floating-rate loans tracking the downward trend in market rates. ERW also plans to increase the fixed-rate portion of its debt, given the attractive current rates. The IBD/E ratio remained at 1.2x in 2Q26, as additional borrowings will be required to support planned expansions in 2026. We view declining interest costs as a key earnings catalyst for ERW in 2H26.
Highlights
- We attended ERW’s analyst meeting to review its 2Q26 results and the tone was positive.
- We see an improving outlook in 3Q26, mainly driven by strong booking demand of economy to luxury portfolio which drives up the ADR.
- We remain optimistic about ERW, and it remains one of our top picks in the hotel sector. We see more supporting factors in 2H26 such as strong booking demand, the declining interest cost, the reopening of Naka Phuket and the large events in 2H26. Maintain BUY with a target price of Bt4.40.
Analysis
- Positive tone from the analyst meeting. We attended The Erawan Group’s (ERW) analyst meeting to review its 2Q26 results and the tone was positive.
- Strong outlook in 3Q26. The management provided ERW’s 3Q26 guidance, expecting 3Q26 room revenue to show a strong growth yoy of 7%. Meanwhile, RevPar for the whole portfolio is expected to show 2% yoy growth, with main contribution coming from economy to luxury hotel portfolio. The key drive in 3Q26 is expected to be from the rising average daily rate (ADR), driven by strong booking demand. Middle East guests who come for medical treatment are the notable contributors in 3Q26, which is the traditional high season of Middle East arrivals. The demand from Middle East guests in Aug 26 was very strong and exceeded ERW’s expectations. Hence, we expect 3Q26 to be a gradually improving quarter for ERW as we have seen that the impact from Grand Hyatt renovation is manageable.
- Declining interest costs to support earnings. Following management’s plan to refinance part of its loans to further reduce interest costs, the prepayment fee incurred in 2Q26 should be the last significant expense under the current refinancing plan. Going forward, ERW should fully benefit from lower interest costs, which are currently at a low level of 2.9% by end-2Q26. Its average cost of funds has declined each quarter, partly due to floating-rate loans tracking the downward trend in market rates. ERW also plans to increase the fixed-rate portion of its debt, given the attractive current rates. The IBD/E ratio remained at 1.2x in 2Q26, as additional borrowings will be required to support planned expansions in 2026. We view declining interest costs as a key earnings catalyst for ERW in 2H26.
BUY (Maintained)
Current price:
Target price:
Upside:
Bt3.64
Bt4.40
+20.9%
Analyst
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