3Q22 earnings should mark further YoY and QoQ growth—despite rising costs—supported by heavier consumption spending and the restoration of scale. We like M’s swift recovery story, inexpensive valuation, high ROE, and expected 4.5% dividend yield for 2023.
Our top QSR play
M is a play on swiftly recovering consumption spending—YoY and QoQ growth for both 3Q22 and 4Q22. We expect spectacular SSSG of 103% for 3Q22 (a two-month hard lock-down during 3Q21), supported by a recovery in dine-in activity at its 710 outlets across Thailand. Our model points to M’s 2023 earnings equaling 96% of its 2019 level, driven by improving sales at MK Restaurants (MK), Yayoi, and LAEM CHAROEN SEAFOOD (LCS), and an additional 62 outlets that opened, 2020-22. The stock trades at a 2023 PER 21x, 0.9SD below its 10-year average of 25x. It offers a high 2023 ROE of 18% and we expect a 4.5% dividend yield for 2023. Our investment horizon rolls over to YE23 with a new target price of Bt72.