M is a key play on dual recoveries in consumption and tourism. With its scale and cost-efficiency (plus a turnaround at LCS), we expect 2023 earnings to equal 94% of the 2019 number. On top of its profit recovery story and high ROE, we like M for its cheap 2023 PER of 22x (below its 2017-19 mean of 25x). The stock offers a good dividend yield of 4.2% for 2023. BUY!
Domestic consumption recovery play
M opened for business 36 years ago with a single restaurant in Siam Square; it now has 700+ outlets across Thailand. Its main brands are MK RESTAURANTS, Yayoi, and Laem Charoen SEAFOOD (LCS). M’s competitive edges are scale, food quality, great service, prime locations in malls, and its central kitchen and cold-storage logistics operations, which together present a major barrier to entry for potential competitors. We expect 2022 earnings to equal 60% of the 2019 number and 2023 profit to equal 94% of the 2019 number. ROE should be 18% in 2022 (equal to the 2019 level). M’s 2023 PER is cheap at 22x (the 2017-19 mean is 25x). BUY to a YE22 DCF-derived target price of Bt67. We expect a good dividend yield for 2023 of 4.2%.