Equity Analysis /

Home Product Center PCL: Home improvement leviathan!

  • To benefit from reopening and post-COVID era

  • HMPRO to remain dominant home improvement player

  • Moderate earnings growth profile for 2022-24

Bualuang Securities
3 May 2022

We have re-initiated coverage on HMPRO with a BUY rating to a DCF-derived YE22 target price of Bt17.5. HMPRO will benefit from Thailand reopening and will continue building market share. Our BUY call is premised on a quality earnings outlook and an attractive valuation compared to discretionary retail peers.

To benefit from reopening and post-COVID era

HMPRO is Thailand’s dominant player in home improvement space and it has the biggest merchandise mix. Its customer base is concentrated in mid- to high-income demographics, whose spending is not very sensitive to the state of the economy. During the 2020 lockdown the firm ramped up online sales and during the 2021 lockdown most HMPRO stores stayed open, so its sales proved much more resilient through the COVID-19 era than any other discretionary retailer’s sales (through the lock-downs, consumer spending migrated from services to consumer durables). With Thailand open, we expect demand tied to home reno-vation and sales of hardline goods, such as sanitaryware and cons-truction materials, to support growth in same-store sales and earnings.