The Middle East conflict could delay Minor International Plc's plans to launch its real estate investment trust (REIT) and initial public offering (IPO) in Singapore, although the timeline is still expected to fall in the second half of the year.
William Heinecke, chairman of Minor International, said investors are concerned about yields and interest rates, with additional uncertainty stemming from the Middle East conflict.
"We are sitting, waiting for the war to end, and that should allow us to move more quickly," said Mr Heinecke.
Minor plans to launch a US$1.3-billion REIT on the Singapore Exchange comprising several hotels.
It decided to shift the IPO launch of its food business from Hong Kong to Singapore, which is more attractive in terms of a quicker listing, he said.
The offering will be a Southeast Asia-focused opportunity. Compared with Thailand, Singapore also attracts more foreign analysts and investors, helping the company gain greater international exposure.
Over 75% of its businesses are now overseas, while the remainder are in Thailand.
Mr Heinecke said that, so far, reduced air traffic in the Middle East has affected tourist destinations such as Thailand, the Maldives and Sri Lanka.
Higher fuel prices have pushed up travel costs. Tourists have faced higher airfares for long-haul flights due to reduced transit options in the Middle East.
"I always look on the positive side of things. I believe the second half of the year can still be good if the war ends shortly," said Mr Heinecke. "Certainly, it must end this month; otherwise, we will start to see the damage in the second half."
After securing solid operating results in the first quarter, he said the company had already seen some impact in the second quarter.
"I don't expect that the war in the Middle East will cause us to incur any losses, but we may see reduced profits and lower turnover."
According to the Tourism Ministry, during the first five months of the year, Thailand welcomed 14 million foreign arrivals, a 2.3% decline year-on-year. The largest source markets were China, with 2.3 million arrivals, and Malaysia, with 1.7 million.
The Middle East flight disruption and high fuel prices could also halve global airline profitability, according to the International Air Transport Association.
Airlines are expected to report total net profit of $23 billion this year, roughly half the previously projected $41 billion and about half the $45 billion profit estimated for 2025.
Their net profit margin is also expected to fall to 2.0% this year, less than half the 4.2% estimate last year.
