Equity Analysis /
Thailand

CP All: Strong SSSG momentum

  • 7-Eleven continued to benefit from rising out-of-home traffic

  • Margin pressures from rising food and utilities prices

  • Earnings forecasts revised up slightly, due to strong SSSG

Chalinee Congmuang
Chalinee Congmuang

Equity Research Analyst

Bualuang Securities
1 June 2022

Our channel check with CPALL confirms 10% SSSG in the quarter-to-date. We now expect strong SSSG through the rest of 2022, out-weighing the effect of margin squeeze tied to higher costs, so have upped our 2022-24 core profit forecasts by 1-2%. Our BUY call stands to a new YE22 target price of Bt80 (up from Bt79).

7-Eleven continued to benefit from rising out-of-home traffic

After a strong traffic recovery during Songkran, we believe CPALL will continue to benefit from back-to-school and office business in 2Q22. Quarter-to-date, our channel check with CPALL showed SSSG of 10%. The SSSG trend is in line with the Google Mobility Index, which pointed to a recovery in traffic, as schools and offices reopened in May (after new COVID-19 cases dived). Last year’s low SSSG base started in June (the advent of the Delta variant) and we expect an ongoing recovery in tourist arrivals to Thailand (with peak seasonality in 4Q22), so CPALL looks set to achieve 10% SSSG in 2Q22 and for the rest of this year, which would make for 2022 SSSG of 10.5% (our new assumption; we had previously assumed only 5% for 2022; 1Q22 SSSG was 13%).