Street Calls of the Week
Investing.com - UBS initiated coverage on Thai Airways International PCL (THAI:TB) with a Sell rating and a price target of THB9.50, citing concerns about valuation and future performance expectations.
The investment bank noted that while Thai Airways’ profitability and balance sheet have improved since the COVID pandemic, the current consensus expectations assume revenue acceleration from 2025 and operating profit margins exceeding 20% over 2025-2027, which UBS considers a high bar to meet.
UBS pointed out that operating profit margins above 20% are uncommon even among profitable airlines in the Asia-Pacific region, suggesting the market may be overly optimistic about Thai Airways’ future performance.
The firm also highlighted concerns about a potential free cash flow shortfall through 2025-2029 that could impact the company’s ability to meet its dividend payout target of at least 25%, given its large capital expenditure plans.
With the stock having risen 188% against the offer price at the latest secondary offering, UBS believes the valuation looks rich compared to peers across various metrics, and warned that tradable shares in circulation would increase significantly in February 2026, potentially putting downward pressure on the share price.
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