Equity Analysis /
Thailand

Central Retail Corp PCL: Reopening driving CRC’s recovery

  • SSSG and profitability to recover along with reopening

  • Fairly insulated from profit squeeze tied to cost-push inflation

  • Strong 1Q22 earnings recovery expected

Chalinee Congmuang
Chalinee Congmuang

Equity Research Analyst

Bualuang Securities
3 May 2022

We have re-initiated coverage on CRC with a HOLD rating and a target price of Bt44. The firm is a prime beneficiary of the reopening theme. We forecast a 2022-24 core profit CAGR of 250%. Despite our cautious view regarding overall purchasing power and competition from online retailers, we expect CRC’s recovery to be driven by a rebound in fashion sales, Thai Watsadu business expansion, and Vietnam’s reopening.

SSSG and profitability to recover along with reopening

We like CRC for its same-store sales and profit recovery stories tied to the reopening of Thailand, Vietnam, and Europe, especially in 2022—our model points to YoY core profit growth of 2,833% (from a very low 2021 base). Also, its customer base is concentrated mid- to high-income demo-graphics; these demographics are spending heavily as COVID-19 fades from view (CRC marked strong SSSG for 4Q21, which we expect to continue through 2022). Assuming that inbound tourism resumes pre-COVID era numbers by 2024, we expect CRC’s core profit to resume its pre-COVID era level by 2023.