Equity Analysis /
Thailand

Berli Jucker Public Company Limited: Much more than a grocer

  • Much more than a grocery retailer

  • Big C driving profit growth, 2022-23

  • Packaging and consumer supply chains to see margin recoveries

Bualuang Securities
11 October 2022

We have re-initiated coverage on BJC with a BUY call to a DCF-derived target price of Bt40. Its retail flagship, Big C, will benefit from Thailand’s reopening this year and its manufacturing supply chains will lead 2023 profit growth on fatter margins as raw material costs decline. 3Q22 will prove to be BJC’s trough quarter of 2022. Its PER is currently at a 10-year low and we expect a dividend yield for 2022 of 3%. BUY.

Much more than a grocery retailer

BJC is not just a hypermarket operator (Big C ranks third among big-format Thai grocery retailers), it is ASEAN’s biggest glass packaging maker and Thailand’s largest manufacturer of aluminum cans, beauty bar soaps, and tissue paper. As such, it is both a retailer that will benefit from reopening and a maker of consumer products for which demand will rise in tandem with Thailand’s post-COVID recovery. More importantly, we expect a margin recovery, as the prices of several key raw materials, chiefly aluminum and palm oil, are trending down (Figure 1-2 show revenue and EBIT by business).