Equity Analysis /

Thailand: Thai Retailers - Still expect sales-led profit recovery for the sector

  • Strong 1Q22 recovery numbers proved reopening

  • Retailers managed margins well in 1Q22

  • Seasonality and inflation may squeeze numbers QoQ, 2Q-3Q22

Bualuang Securities
20 May 2022

1Q22 results proved that Thai retailers are prime beneficiaries of Thailand reopening. Looking forward, although cost-push inflation may squeeze retailers’ margins in 2Q-3Q22, we still expect sales growth (low YoY bases and incoming tourists) to drive profit expansion. CPALL and CPN remain our top picks for their respective earnings growth stories, operating leverage, revenue profiles, customer demographics, and valuations.

Strong 1Q22 recovery numbers proved reopening

The Thai retailers under our coverage—CPALL, CPN, CRC, HMPRO, and MAKRO—reported solid 1Q22 average SSSG of 7% (versus 6% in 4Q21 and -8% in 1Q21). The SSSG leaders were CPALL (13%) and CRC (11%). In contrast, with close-to-normal bases, MAKRO’s SSSG was 1% and HMPRO’s was 3%. Because MAKRO fully consolidated Lotus’s, our coverage reported aggregate revenue growth of 52% YoY and 7% QoQ. Stripping out Lotus’s, our coverage’s average revenue growth was 38% YoY and 5% QoQ.