CP Axtra Public Company Limited (SET: CPAXT) is expected to sustain its profit growth trajectory on a year-over-year basis in Q2/2025, despite facing increasingly fierce price competition in the retail sector, according to an analysis by Bualuang Securities. This positive outlook is supported by improved margins at Makro and continued cost controls at Lotus’s.
Q2/2025 Earnings Supported by Margin Expansion and Cost Controls
Bualuang Securities projects CPAXT’s core profit for Q2/2025 at THB 2.35 billion, slightly below its previous estimate of THB 2.4-2.5 billion. The downward revision is primarily attributed to heightened price competition. Nevertheless, year-on-year core profit growth is anticipated at 8%, despite an expected 11% quarter-on-quarter drop due to seasonal factors.
The report highlights that Makro’s gross margin should improve by 40 basis points, buoyed by accounting adjustments and synergies from the Makro-Lotus’s merger. Meanwhile, Lotus’s is projected to continue its stringent cost control measures, further supporting the group’s bottom line.
Q2/2025 retail sales are forecast at THB 124.1 billion, up 2% YoY and flat QoQ. Sales splits between Makro at THB 68.8 billion and Lotus’s at THB 55.3 billion. Same-store sales growth, however, is expected to stagnate, reflecting softening demand for summer-related products such as beverages and cooling appliances, as well as overall weak consumer sentiment.
The average gross margin is projected at 14.3%, up from 14.1% in Q2/2024. Meanwhile, selling, general, and administrative (SG&A) expenses as a percentage of sales are set to fall to 15.0%, a 30bps YoY decline, driven by better cost control at Lotus’s.
Profit Growth Outlook for 2025 Limited by Price Competition
Bualuang Securities has revised down its core profit forecasts by 5% for both 2025 and 2026 and by 4% for 2027 to reflect the increasingly aggressive price competition in the retail segment amid subdued consumption. The new forecast for 2025’s core profit stands at THB 11.6 billion, a 5% YoY increase, mainly supported by expected synergies from the Makro-Lotus’s integration valued at THB 2.5 billion. Most of these will stem from new commercial terms effective in the second half of 2025. Gross margins are anticipated to expand both year-on-year and half-on-half.
Looking ahead to Q3/2025, further YoY profit growth is anticipated, albeit with a projected QoQ decline due to seasonal factors, particularly as the period coincides with heavy monsoon rainfall.
CPAXT Set to Outperform Most Retail Sector Peers
Despite the profit forecast downgrading to 5%, CPAXT’s projected growth still outpaces almost all other retail sector stocks under Bualuang’s coverage, with the average sector profit expected to decline by 4% YoY. CPALL is the only peer forecast to see faster growth, at 9%.
CPAXT’s key strategy focuses on enhancing profitability by increasing the proportion of private-label (house brand) products, whose margins are on average about 3% higher than other products. The contribution from house brands rose from 14.4% of total sales in 2023 to 15.4% in Q1/2025, with expectations of reaching 15.5% in 2025 and 16% in 2026.
Synergy from the Makro-Lotus’s integration remains a significant driver, with another THB 2.7 billion in new synergies anticipated in 2026, potentially boosting core profit by 13% YoY to THB 13.1 billion—substantially outpacing the forecast 8% profit growth for the retail sector as a whole in 2026.
Bualuang Securities reiterates its “BUY” recommendation on CPAXT, with a revised 2025 year-end target price of THB 25, down from the previous target of THB 32.
Additionally, Bualuang Securities also noted in its research on July 4 that CPALL and CPAXT are positioned to benefit the most amid the slowdown in retail same-store-sales growth as the overall grocery segment remained the most resilient in June, slipping just 1% YoY.
CPAXT indicated a flat SSS for June, supported by steady food services demand and growth in international operations, making it the top retail SSS performer among Bualuang’s coverage.
