Equity Analysis /
Thailand

Thai:Thai Grocery Retailers-Reopening enables sturdy CPALL profit growth for1Q22

  • CPALL to mark solid YoY and QoQ recovery for 1Q22

  • MAKRO to see a much slower growth in 1Q22 profit than sales

  • Expect positive sentiment during Songkran to drive 2Q22 SSSG

Chalinee Congmuang
Chalinee Congmuang

Equity Research Analyst

Bualuang Securities
12 April 2022

We expect CPALL to report solid YoY and QoQ profit growth for 1Q22, led by SSSG of 11%. In contrast, declining govt stimulus and expenses tied to consolidating Lotus’s suggest that MAKRO will mark SSSG of just 1.5% and subdued profit growth. Looking ahead to 2Q22, cost pressures may drag on earnings somewhat and the 2Q21 base was relatively high, but we expect positive sentiment and Songkran to boost SSSG and profits.

CPALL to mark solid YoY and QoQ recovery for 1Q22

For 1Q22, we expect CPALL to report a consolidated core profit of Bt3,152m (up by 24% YoY and 13% QoQ). A strong CVS recovery was the driver. We assume CVS SSSG of 11%. 1Q22 was also the first full quarter of the consolidation of Lotus’s. Our model points to consolidated revenue of Bt189bn (up by 47% YoY and 6% QoQ). Looking at the CVS operation, we assume a strong recovery in traffic to 7-Eleven stores and heavier YoY spending per ticket (Figure 4 and 5) in the quarter, so substantially higher sales and core earnings. Although we expect CPALL to mark a slimmer YoY GM, due mainly to higher fuel costs (which would have pushed up costs along its supply chain), we believe strong SSSG and good control of SG&A expenses will still have enabled a YoY recovery in operating margin (Figure 1).