To The Moon

The World Economic Forum noted that global tourism rebounded strongly in 2022, with international tourist arrivals more than doubled when compared to the previous two years. As international travel continues to pick up, Singapore’s tourism sector has seen similar growth momentum. Data from the Singapore Tourism Board (STB) showed that Singapore’s visitor arrivals in April 2023 surpassed 1.1 million, the highest in a month since the pandemic, bringing the total number of visitor arrivals in 2023 to over 4 million as of 30 April. Tourism and Hospitality Stocks Benefit from Recovery Momentum With China’s reopening and the increase in international flight capacities, STB estimated that international visitor arrivals to Singapore would be in the range of 12 to 14 million in 2023, with full tourism recovery expected by 2024. Tourism receipts are anticipated to net $18 billion to $21 billion accordingly. Singapore’s 10 most traded stocks that represent the travel and hospitality industries have returned an average 1.3% gain over the first 20 weeks of 2023 ending 18 May, outperforming the STI’s YTD total return of 0.3%. The 10 stocks booked a combined net institutional inflow of S$186.7 million in the YTD, which was in contrast to the broader Singapore stock market, which booked over S$2.3 billion of net institutional outflow. Amongst the 10 stocks, Genting Singapore $GENTING SINGAPORE LIMITED(G13.SI)$ and Singapore Airlines $SINGAPORE AIRLINES LTD(C6L.SI)$ led the net institutional inflow YTD. Together, the 10 stocks have contributed 9% of the day-to-day turnover of all stocks listed on SGX over the past 20 weeks of 2023. The 10 stocks span across three sectors – Industrials, Consumer Cyclicals and REITs – with Singapore Airlines (SIA), Genting Singapore (Genting) and CapitaLand Ascott Trust (CLAS) $Ascott Trust(HMN.SI)$ being the most traded stock in each sector. The 3 stocks generated a total return of 10.1%, 7.7% and 3.0% respectively in the YTD ending 18 May. Name Stock Code YTD Avg Daily T/O (S$M) Mkt Cap (S$M) Net Insti Flow YTD (S$M) 2023 YTD Total Return % Sector Genting Singapore G13 33.3 12,193 174.2 7.7 Consumer Cyclicals SIA C6L 23.8 18,091 80.6 10.1 Industrials CapitaLand Ascott Trust HMN 6.9 3,671 5.1 3.0 REITs 1.Singapore Airlines $SINGAPORE AIRLINES LTD(C6L.SI)$ In its latest FY2022/23 result, SIA posted a 133.4% year-on-year (YoY) growth in revenue to $17.8 billion while its net profit grew $3.12 billion to reach $2.16 billion, the highest in 76 years, as compared to its $962 million net loss in FY2021/22. Group passenger load factor reached a record high of 85% in FY2022/23 as compared to 30% in FY2021/22, attributing the positive results to strong demand for air travel after Singapore fully reopened its borders in April 2022. Both its carriers, SIA and Scoot, were among the first to launch flights and capture the pent-up demand upon the reopening of borders. Prior to COVID-19, SIA commanded a 1.3% weight in the FTSE ST ALL-Share Index. Following on from a significant fund raising in 2020, the company maintained a 2.2% weight in the FTSE ST ALL-Share Index as of 18 May 2023. Similarly, the stock is now the second largest by weight in the Bloomberg Asia Pacific Airlines Index, moving up 4 spots from end 2019. While the socio-economic impacts of COVID-19 devastated the airlines industry, back in mid-2020, SIA signalled its resolve that the next chapter of its transformation journey would focus on how it strengthens its position as a global aviation leader in the new world. So far this year, SIA is ranked fourth highest in net institutional inflow stock, after ranking as the tenth highest net institutional fund inflow stock in 2022. Riding on the recovery momentum, SIA noted that “demand for air travel remains robust in the first quarter of FY2023/24, underpinned by the recovery in air travel in East Asia.” However, it also highlighted that “near term cargo demand is expected to remain soft as the industry navigates headwinds from the macroeconomic environment which include inflationary pressures, geopolitical tensions and high fuel cost”. 2.Genting Singapore $GENTING SINGAPORE LIMITED(G13.SI)$ In the YTD ending 18 May 2023, Genting booked the highest net institutional inflows across the Singapore stock market. In 1Q2023, the group’s revenue grew 54% YoY to $484.5 million and EBITDA grew 56% YoY to $189.7 million. Genting highlighted the growth was due to the ongoing recovery of regional travel and gaming demand. Going ahead, Genting will continue with its RWS 2.0 strategy, a $4.5 billion expansion project over different phases, and continue enhancing its brand identity as a premium luxury destination that appeals to trendy and affluent customers. The Group noted that ongoing construction works for RWS 2.0 strategy including Minion Land at the Universal Studios Singapore and the Singapore Oceanarium are progressing well with soft opening scheduled for early 2025. It has also been successful in securing premium lifestyle events that appeal to affluent visitors, having become the official venue to host signature events such as the Asia’s 50 Best Restaurants 2023 and Wine Pinnacle Awards 2023. 3.CapitaLand Ascott Trust $Ascott Trust(HMN.SI)$ In its 1Q23 business update, CLAS reported an increase in gross profit by 59% YoY. This was due to stronger operating performance and contributions from new properties. The trust also saw an increase in Revenue per Available Room (RevPAU) by 90% YoY, with key markets – Australia, Japan, Singapore and USA – performing at pre-Covid levels or above. Notably, CLAS’ Japan RevPAU jumped 351% YoY to 105% of same-store pre-Covid levels, following the country’s reopening to independent leisure travellers in October 2022. 10 Most Traded Tourism & Hospitality Related Stocks Stock Stock Code YTD Avg Daily T/O (S$M) Mkt Cap (S$M) Net Insti Flow YTD (S$M) 2023 YTD Total Return % Sector Genting Singapore G13 33.3 12,193 174.2 7.7 Consumer Cyclicals SIA C6L 23.8 18,091 80.6 10.1 Industrials SATS S58 15.1 3,971 -28.3 -0.6 Industrials ComfortDelGro C52 7.9 2,427 -42.0 -5.7 Industrials CapitaLand Ascott Trust HMN 6.9 3,671 5.1 3.0 REITs CDL Hospitality Trusts J85 2.0 1,467 0.0 -3.0 REITs Far East Hospitality Trust Q5T 0.8 1,198 -2.0 -0.6 REITs SIA Engineering S59 0.8 2,648 1.0 0.9 Industrials Frasers Hospitality Trust ACV 0.3 905 -1.2 8.4 REITs Mandarin Oriental Intl M04 0.3 3,001 -0.6 -7.7 Consumer Cyclicals Total 91.2 186.7 Average 1.3 https://www.sgx.com/research-education/market-updates/20230523-tourism-and-hospitality-stocks-benefit-recovery-momentum