Equity Analysis /
Thailand

Home Product Center PCL: Soft 4Q22 profit expected

  • Lined up for 4Q22 profit slippage from a high 4Q21 base

  • Strong baht and lower freight rates boost earnings outlook

  • Moderate 2023 earnings growth profile

Bualuang Securities
20 January 2023

HMPRO looks set to report YoY profit slippage for 4Q22, due mainly to a high 4Q21 base. But looking to 2023, we expect the ongoing consumption spending recovery, a strong baht, and lower freight rates to push up the bottom-line.

Lined up for 4Q22 profit slippage from a high 4Q21 base

We expect HMPRO to report 4Q22 net earnings of Bt1,723m, down 3% YoY but up 12% QoQ. Our SSSG assumption is 1.5% and five new stores opened during 2022 (four MEGAHOME and one Homepro), so our model points to sales of Bt16,920m, up by 5% YoY and 6% QoQ. Heavier traffic at Market Village and the Home Pro Expo would have made for 4Q22 rental income of about Bt481m, up by 27% YoY and 9% QoQ. And a rising proportion of house-brand sales should have yielded a GM of 27.2%, up from 27.1% in 4Q21 and 26.8% in 3Q22. However, per-unit electricity and staff costs rose, so we assume that operating margin declined to 12.2% in 4Q22 from 12.8% in 4Q21 (but modestly fatter QoQ).