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  • Best play on economic recovery and inflation hedging in Thailand
  • SSSG turnaround to continue
  • Margins to improve

HMPRO is the best play in the early stage of Thailand’s economic recovery with an expected boost from inflation uptrend. Share price trades at a 2021 PER of 32.6x and a 2022 PER of 29.5x, near its mean 2012-2020. Given almost normalized earnings to pre-COVID at Bt5.9bn in 2021e, HMRPO should rebound to pre-COVID price/PER (2019 mean) at Bt16.50 or PER of 38x (1.5SDs above its mean). Our BUY rating stands, a YE21 DCF target price of Bt17.

Best play on economic recovery and inflation hedging in Thailand

We are entering the early stages of economic recovery in Thailand and inflation is rising. Thailand’s GDP is forecast to recover from -6.1% in 2020 to +1.0 to +2.0% in 2021, factoring in the impact of COVID-19 third wave in 2Q21. Thailand’s GDP growth will be positive YoY in 2Q21 through 4Q21 given low base set by negative GDP for five straight quarters in 1Q20-1Q21 (-2.1% in 1Q20, -12.1% in 2Q20, -6.4% in 3Q20, -4.2% in 4Q20 and -2.6% in 1Q21). BOT forecasts inflation in Thailand (headline CPI) reverses from -0.8% in 2020 to +1.2% in 2021.


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