It has been a strong year for tourism stocks so far as travel volume recovers. While the rest of the markets are undergoing a correction, these 5 tourism stocks managed to outperform.
| Tourism Stock | Ticker | 12m performance |
|---|---|---|
| Sim Leisure Group Ltd | URR | 117% |
| Duty Free International Ltd | 5SO | 43% |
| Banyan Tree Holdings Ltd | B58 | 38% |
| UnUsUaL Ltd | 1D1 | 39% |
| RE&S Holdings Ltd | 1G1 | 35% |
For context, STI is up only by 0.88% year-to-date at the point of writing.
Let’s take a look at each of these tourism stocks and whether they should be on your watchlist:
5 Tourism Stocks that Gained >35% in a Year
1) Sim Leisure Group Ltd (SGX: URR)
Sim Leisure is a developer and operator of attractions based in Malaysia. It is an adventure park developer and operator.
Sim Leisure presently owns and operates the ESCAPE brand of adventure parks, showcasing ESCAPE outdoor adventure park in Penang, Malaysia since 2012 and the ESCAPE Challenge indoor park at Paradigm Mall, Petaling Jaya which launched in 2020 It acquired KidZania Kuala Lumpur in December 2020 as well as the KidZania facility in Singapore.
Sim Leisure purchased the KidZania Singapore for a mere S$110,000 and also secured the right to use the KidZania intellectual property via an exclusive license to operate the KidZania Concept in Singapore.
Sim Leisure took possession of the KidZania Singapore Facility on 1 August 2023 and will spend the next 6 months undertaking the fitting-out works of the facility with a projected capital expenditure of S$3 million.
In 1H23, Sim Leisure generated RM 55.6 million in revenue and profits of RM 12.1 million of which RM 8.8 million was attributable to the company.
When KidZania Singapore was operating previously, it reported RM 52 million of revenues in 2019, meaning that if KidZania Singapore was able to perform in line with its previous ownership, it would increase Sim Leisure’s revenue by at least 50%.
The strong performance of its existing assets and the potential from its new assets is likely what drove Sim Leisure’s strong performance in the last year.
2) Duty Free International Ltd (SGX: 5SO)
Duty Free International (DFI) is the largest local duty-free retailing group in Malaysia, with presence at all entry and exit points in Peninsular Malaysia, including airports, seaport, downtown, border towns and popular tourist destinations. In total, DFI currently operates over 40 outlets comprising duty-free retail outlets and duty paid retail outlets located throughout Peninsular Malaysia.
DFI reported revenue of RM 151.8 million, an increase of 53.1% for its FYE Feb 2023. DFI also made a profit of RM 15.6 million, a net profit of more than 10%. DFI continued improving in 1Q24, recording a 50% increase to revenue and a net profit margin of 12%.
While the increase in revenue was because not all outlets were open in the comparative prior period due to COVID-19, the increase in net profit margins was a noteworthy achievement.
The strong performance is likely what drove DFI’s strong performance in the last year.
However, DFI remains cautious in its performance for the rest of the year given some of its outlets are situated at locations that see significant domestic travel. The rising of product and operating costs as a result of weakening of Malaysian Ringgit against major foreign currencies coupled with inflationary pressure may lead to reduced consumer spending.
3) Banyan Tree Holdings Ltd (SGX: B58)
Banyan Tree is a owner and operator of Resorts and Spa in Asia, Middle east and South America. Banyan Tree’s diversified portfolio of hotels, resorts, spas, galleries, golf and residences is centered on five brands – Banyan Tree, Angsana, Cassia, Dhawa and Laguna.
Looking at Banyan Tree’s five year track record, we can see that the company was on a recovery track. In 1H23, Banyan Tree recorded revenues of $143.7 million and core operating profit of $18.7 million, stronger than FY22.
It is worth noting that Banyan Tree’s RevPAR for 1H23 showed a significant increase of 64% compared to 1H22 and 27% increase compared to 1H19.
Looking at the RevPAR data and strong operating profit, it seems like while Banyan Tree has already seen its share price risen 38% in the last one year, it may still have much unrealised potential and it is worth noting that Banyan Tree is still nearly 40% below its highs in 2019.
4) UnUsUaL Ltd (SGX: 1D1)
UnUsUaL specialising in the production and promotion of large-scale live events and concerts by Asian and International artistes.
UnUsUaL’s major shareholder is mm2 Asia (SGX: 1B0), a SGX Mainboard-listed producer of films, TV and online content.
UnUsUaL owns one of the largest technical equipment inventory in Singapore and utilises its assets to markets and organise concert, fan meet, private event, music festival and family entertainment. It also undertakes sourcing for sponsorship and local management of event marketing, ticketing, operation and hospitality.
Events it has collaborated on include the Singapore Arts Festival, Chingay Parade, SG50 Youth Celebrate!, SEA Games Carnival, Siloso Beach Countdown Party, Mediacorp Subaru Car Challenge, Singapore Air Show, Singapore Motor Show, NTUC May Day Rally, Tony Robbins’ Unleash The Power Within Conferences, islandwide NDP Heartland Celebrations, Inter-Racial Inter-Religious Harmony Night and many more.
In its FY ending Mar 2023, UnUsUaL recorded revenues of $29.2 million and a net profit of $1.8 million, this was mainly due to its 2H23 revenues of $22.9 million. The revenue was 7x that of FY22. However it was still below FY20’s record of $61.9 million revenue and $13.1 million in profits.
This demonstrates that UnUsUaL has the capacity to generate much more revenues and with Singapore being increasingly popular as an event hub, UnUsUaL may very well achieve its FY20’s record performance again. Given that its share price is nearly 60% off its all time high, there may be some upside left in this stock as well.
5) RE&S Holdings Ltd (SGX: 1G1)
RE&S Holdings is a Japanese cuisine restaurant operator, with around 20 brands such as Kuriya dining, Ichiban Boshi, Ichiban Sushi, Idaten Udon, Shimbashi Soba, Yakiniku-Go, Shabu-Go and Mister Donut under its company.
The company currently operates about 70 outlets in Singapore, a central kitchen, as well as a procurement office in Japan.
Looking at the company’s performance, revenues and net profits have both exceeded pre pandemic levels and are on an upward trend.
In its first half of FY23 for the period ending 31 December 2022, RE&S recorded revenues of $88.0 million and profits of $5.6 million, a 24% and 62% increase YoY. This was noteworthy because there was only $0.4 million of government grants as compared to $3.6 million in the prior period.
This is off the back of strong shopper spend in Singapore and explains why share prices are nearly 70% higher than before the pandemic.
Closing statements
Overall it has been a strong year for tourism stocks. Some of these stocks were from a low base, made strong post covid recoveries but were still below their all time high performances while some have exceeded their precovid performances.
Of these stocks, we believe Banyan Tree and UnUsUaL may continue on its strong stock price trajectory.
DFI and RE&S Holdings may have seen a near term peak in per store revenue and are limited by the number of outlets it can expand with.
Lastly, Sim Leisure has to turnaround the KidZania Singapore asset and bring it to profitability, something the previous owners were not able to do. Should Sim Leisure be able to achieve this, it would bring significant upside to its net profit and share price.
