We downgrade DOHOME from BUY to HOLD due to limited upside to our target. Our new target price of Bt14.2 (Previous TP; 16.50) derived from 33xPE’21E, which is close to the biggest home-improvement player in Thailand. Our target price cut factored in 17% dilution to EPS’21 from stock dividend paid during 3Q20 DOHOME reported 3Q20 net profit at Bt187m (+40%YoY, +28%QoQ). The 9M20 result was in-line with our expectation and accounted for 73% of 2020E forecast.
We expect 4Q20 earnings performance to grow YoY, but flat QoQ driven by government stimulus scheme and improving margin from higher retail sales contribution.
We still like DOHOME for its 1) cheapest valuation with high potential growth compared to peers; 2) its store locations that aim to tap high spending customers; 3) store network expansion plan with +25%CAGR in the next two years; and 4) the ample room to improve its margin.