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Pi Securities PCL, Thailand

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Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

Equity Bottom-Up

Central Retail Corporation / Equity Bottom-Up

<p><strong>CRC reported 3Q20 net profit of Bt837m (-40%YoY, flip from net loss of Bt2.6bn in 2Q20), below our expectation.</strong></p><div>• The better QoQ performance was a result of easing lockdown and reopening all stores in May 20. Meanwhile, 3Q20 results still drop YoY due to weak domestic consumer spending.</div><div></div><div>• We cut 2020-22E earnings forecast by 80%, 7% and 4%, respectively to factor in weaker consumer spending than our expected. However, we expect 4Q20 performance continue to grow QoQ, supported by government measures and company’s promotions.</div><div></div><div>• We still like CRC for its long-term outlook given leading position in domestic and overseas retail industry with diversified platforms and customer base expansion in Vietnam.</div><p></p><p><strong>We maintain our BUY rating with new target price of Bt37.25(-13% from previous target price) derived from a DCF (10% WACC, 2% TG), implies 24.5xPE’21E, which represents a 4% discount to the World Consumer Discretionary sector.</strong></p>

CRC reported 3Q20 net profit of Bt837m (-40%YoY, flip from net loss of Bt2.6bn in 2Q20), below our expectation.• The better QoQ performance was a result of easing lockdown and reopening all stores in May 20. Meanwhile, 3Q20 results still drop YoY due to weak domestic consumer spending.• We cut 2020-22E earnings forecast by 80%, 7% and 4%, respectively to factor in weaker consumer spending than our expected. However, we expect 4Q20 performance continue to grow QoQ, supported by government measures and company’s promotions.• We still like CRC for its long-term outlook given leading position in domestic and overseas retail industry with diversified platforms and customer base expansion in Vietnam.We maintain our BUY rating with new target price of Bt37.25(-13% from previous target price) derived from a DCF (10% WACC, 2% TG), implies 24.5xPE’21E, which represents a 4% discount to the World Consumer Discretionary sector.

CRC: Expect 4Q20 to Grow QoQ Backed by High Seasonality

<p><strong>We upgrade from HOLD to BUY rating with a new target price of Bt16.5 based on 33xPE’21E (Previous TP is Bt12.5), which is close to the biggest home-improvement player in Thailand.</strong></p>
<ul>
<li>We expect 3Q20 earnings to grow to Bt189m (+41%YoY, 29%QoQ) driven by a strong SSSG at 9%, turning profit of Surin branch after one month operation, and improving margin from higher retail sales contribution.</li>
<li>We foresee SSSG at 9%YoY in 3Q20 mainly driven improving contribution from Ubon Ratchathani branch due to low base in 3Q19.</li>
<li>We revised up our sales and net profit forecast by 5% and 12% in 2020E to factor in strong SSSG than our expectation.</li>
</ul>
<p><strong>We still like DOHOME for its 1) cheapest valuation with high growth compared to peers; 2) the positioning of all its stores in locations of high potential demand; 3) plan to expand its store network by 60% within the next two years; and 4) the ample room to grow its margin.</strong></p>

We upgrade from HOLD to BUY rating with a new target price of Bt16.5 based on 33xPE’21E (Previous TP is Bt12.5), which is close to the biggest home-improvement player in Thailand.

We expect 3Q20 earnings to grow to Bt189m (+41%YoY, 29%QoQ) driven by a strong SSSG at 9%, turning profit of Surin branch after one month operation, and improving margin from higher retail sales contribution.
We foresee SSSG at 9%YoY in 3Q20 mainly driven improving contribution from Ubon Ratchathani branch due to low base in 3Q19.
We revised up our sales and net profit forecast by 5% and 12% in 2020E to factor in strong SSSG than our expectation.

We still like DOHOME for its 1) cheapest valuation with high growth compared to peers; 2) the positioning of all its stores in locations of high potential demand; 3) plan to expand its store network by 60% within the next two years; and 4) the ample room to grow its margin.

DOHOME: Expect SSSG Stronger than Peers in 2H20 and 2021

<p><strong>Yesterday's meeting came out positive tone. The acquisition of COL will strengthen its omni-channel business and expand its customer base to B2B customers.</strong></p>
<div>• The company approved the acquisition of COL and will make a tender offer for all 640 million shares of COL with the offering price of Bt19 or Bt12bn in total.</div>
<div>• Growth from acquisitions will reflect in 2021 earnings.</div>
<div>• Revised 2021-22E earnings forecast up by 11% and 17%, respectively.</div>
<div>• We believe earnings will grow 10% CAGR in the next three year, supported by more comprehensive distribution channel through the omni-channel platform and improved management efficiency.</div>
<p></p>
<p><strong>We maintain our BUY rating  with a new target price of Bt42.6, which is derived from a DCF (10% WACC, 2% TG). Our target price implies 26xPE’21E, which represents a 2% discount to the World Consumer Discretionary sector.</strong></p>

Yesterday's meeting came out positive tone. The acquisition of COL will strengthen its omni-channel business and expand its customer base to B2B customers.
• The company approved the acquisition of COL and will make a tender offer for all 640 million shares of COL with the offering price of Bt19 or Bt12bn in total.
• Growth from acquisitions will reflect in 2021 earnings.
• Revised 2021-22E earnings forecast up by 11% and 17%, respectively.
• We believe earnings will grow 10% CAGR in the next three year, supported by more comprehensive distribution channel through the omni-channel platform and improved management efficiency.

We maintain our BUY rating  with a new target price of Bt42.6, which is derived from a DCF (10% WACC, 2% TG). Our target price implies 26xPE’21E, which represents a 2% discount to the World Consumer Discretionary sector.

CRC: Acquisition of COL Will Encourage Hardline and Omni-Channel Business

<p><strong>CRC reported 2Q20 net loss of Bt2.6bn compared to net profit of Bt1.3bn and Bt743m in 2Q19 and 1Q20, respectively, the worst quarter from available data.</strong></p>
<div>• The closure of certain areas in all department stores during 22 Mar-16 May 20 according to government order is a major cause of the drop in earnings.</div>
<div>• Also, gross margin narrowed to 21.6% from 29.3% in 2Q19 due to increase mix of hardline and food segment and online sales as well as discount given to customers to boost the sales.</div>
<div>• We expect CRC’s earnings should recover from 3Q20E onwards given re-opening all department stores since 17 May 20 and continue to expand new department store.</div>
<div>
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</div>
<p><strong>We maintain our BUY rating with the target price of Bt45.0, which is derived from a DCF (12% WACC, 2% TG). Our target price implies 66.5xPE’20E, which represents a 13% discount to the Thai Consumer Discretionary sector.</strong></p>

CRC reported 2Q20 net loss of Bt2.6bn compared to net profit of Bt1.3bn and Bt743m in 2Q19 and 1Q20, respectively, the worst quarter from available data.
• The closure of certain areas in all department stores during 22 Mar-16 May 20 according to government order is a major cause of the drop in earnings.
• Also, gross margin narrowed to 21.6% from 29.3% in 2Q19 due to increase mix of hardline and food segment and online sales as well as discount given to customers to boost the sales.
• We expect CRC’s earnings should recover from 3Q20E onwards given re-opening all department stores since 17 May 20 and continue to expand new department store.

 

We maintain our BUY rating with the target price of Bt45.0, which is derived from a DCF (12% WACC, 2% TG). Our target price implies 66.5xPE’20E, which represents a 13% discount to the Thai Consumer Discretionary sector.

CRC: 3Q20 Earnings Should Recovery After Re-Opening All Department Stores

<p><strong>Yesterday analyst meeting came out with a neutral tone. We maintain HOLD rating with a target price of Bt15, which is derived from 33xPE’21E, a 40% premium to Thai Consumer Discretionary.</strong></p><p><strong>Key takeaway:</strong></p><ul>
<li>SSSG turned positively at double digit and low single digit growth during May-June and July 2020 respectively, driven by demand recovery.</li>
<li><span>HMPRO maintains its stores expansion plan at two stores (+1.7%YoY to 115 stores) in 4Q20.</span></li>
<li><span>Expect earnings to recover HoH in 2H20 driven by continuing demand recovery and better product mix. However, we believe improving earnings momentum already priced in. Any correction in share price will be an opportunity to accumulate to realize strong earnings recovery in 2021.</span></li>
</ul><p><strong>We still like HMPRO for its 1) higher profitability compared to peers; 2) SSSG in recovering phase; 3) continuing stores expansion; and 4) long-term growth driver from Omni-channel sales.</strong></p>

Yesterday analyst meeting came out with a neutral tone. We maintain HOLD rating with a target price of Bt15, which is derived from 33xPE’21E, a 40% premium to Thai Consumer Discretionary.Key takeaway:
SSSG turned positively at double digit and low single digit growth during May-June and July 2020 respectively, driven by demand recovery.
HMPRO maintains its stores expansion plan at two stores (+1.7%YoY to 115 stores) in 4Q20.
Expect earnings to recover HoH in 2H20 driven by continuing demand recovery and better product mix. However, we believe improving earnings momentum already priced in. Any correction in share price will be an opportunity to accumulate to realize strong earnings recovery in 2021.
We still like HMPRO for its 1) higher profitability compared to peers; 2) SSSG in recovering phase; 3) continuing stores expansion; and 4) long-term growth driver from Omni-channel sales.

HMPRO: 2H20 Earnings Momentum Already Priced In

Thailand

Central Retail Corporation Public Company Limited is a multi-format retailing business operating across Thailand, Italy, and Vietnam, and is a flagship company of Central Group. It offers a diverse portfolio across food, fashion, hardline, and property segments, encompassing department stores, supermarkets, hypermarkets, specialty stores, and omnichannel services. The company was founded in 1947 and is headquartered in Bangkok, Thailand.

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Central Retail Corporation (CRC TB)

CRC: Expect 4Q20 to Grow QoQ Backed by High Seasonality

We maintain our BUY rating with new target price of Bt37.25(-13% from previous target price) derived from a DCF (10% WACC, 2% TG), implies...

Pi Securities PCL, Thailand

DOHOME: Expect SSSG Stronger than Peers in 2H20 and 2021

We upgrade from HOLD to BUY rating with a new target price of Bt16.5 based on 33xPE’21E (Previous TP is Bt12.5), which is close to the biggest...

Pi Securities PCL, Thailand

CRC: Acquisition of COL Will Encourage Hardline and Omni-Channel Business

Yesterday's meeting came out positive tone. The acquisition of COL will strengthen its omni-channel business and expand its customer base to B2B...

Pi Securities PCL, Thailand

CRC: 3Q20 Earnings Should Recovery After Re-Opening All Department Stores

CRC reported 2Q20 net loss of Bt2.6bn compared to net profit of Bt1.3bn and Bt743m in 2Q19 and 1Q20, respectively, the worst quarter from available...

Pi Securities PCL, Thailand

HMPRO: 2H20 Earnings Momentum Already Priced In

Yesterday analyst meeting came out with a neutral tone. We maintain HOLD rating with a target price of Bt15, which is derived from 33xPE’21E, a 40%...

Pi Securities PCL, Thailand

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