Equity Analysis /
Thailand

Home Product Center PCL: Decent growth outlook at a bargain valuation

  • Strong YoY earnings recovery expected for 3Q22

  • 4Q22 set to be this year’s peak quarter

  • Several drivers of 2023 profit growth

Bualuang Securities
19 October 2022

We expect strong SSSG and a YoY profit surge for 3Q22, followed by 4Q22 marking the best earnings of 2022. Looking to 2023, SSSG, a rental income recovery, and sales at new stores will drive bottom-line growth, which we forecast at 14% YoY.

Strong YoY earnings recovery expected for 3Q22

SSSG and rental income led the modeled 3Q22 core profit growth; we estimate Bt1,417m, up 62% YoY (but down seasonally 7% QoQ). Based on solid SSS recoveries in Jul and Aug, we assume SSSG of 18% for the quarter and—supported by three new stores that opened during the previous 12 months—total 3Q22 sales of Bt15,936m, up 21% YoY but down 2% QoQ. Also, ongoing post-COVID normalization should have made for rental & service income of Bt425m, up by 96% YoY and 5% QoQ. Although high diesel and electricity prices would have pushed up costs, HMPRO’s YoY profit growth would have been boosted by rental income and its GM sustained by a bigger proportion of house branded items in the sales mix.