CGS International Securities (Thailand) (CGSI) notes in its report that Home Product Center Public Company Limited (SET: HMPRO) reported a second-quarter net profit of THB 1.4 billion, marking a 14% decline from a year earlier and an 18% drop from the previous quarter.
The result matched forecasts from the analyst but landed about 3% below the consensus estimate from Bloomberg, as challenging market conditions continued to weigh on the company’s performance.
Sales growth remained under pressure, with same-store sales (SSSG) declining across all formats. HomePro Thailand saw SSSG slump by 8.8%, while Malaysia operations dropped 14%, and MegaHome recorded a milder 1.6% fall. The slump led to a 50-basis-point contraction in gross margin to 25.8%, attributed primarily to reduced supplier rebates in the wake of lower sales volumes.
Despite a 4.4% year-on-year reduction in selling, general, and administrative expenses (SG&A) to THB 3.2 billion, sluggish sales elevated the company’s SG&A-to-sales ratio by 20 basis points to 18.9%. This pushed the EBIT margin down by 80 basis points to 11.3%.
Looking ahead, the outlook for the third quarter remains subdued, as HomePro Thailand’s SSSG continues to show negative growth in the mid-single digits, though the pace of decline has moderated in the absence of last year’s elevated demand for air conditioners and fans.
Meanwhile, MegaHome’s SSSG has returned to positive territory, supported by the recent conversion of two stores to a hybrid model that incorporates sales from HomePro segments.
Following these developments, CGSI maintains a ‘Hold’ rating on HMPRO.
