Kiatnakin Phatra Securities (KKPS) expects a slight month-on-month (MoM) dip in September same-store sales (SSS) for Thai retailers, with the average SSS likely to remain in the negative low single-digits. The sector faces continued challenges amid heavier rainfall hampering foot traffic, weak meat prices affecting fresh food sales, and an unfavorable base effect from last year’s government cash handout. Additionally, currency fluctuation remains a headwind for international operations.
However, the outlook for the third quarter is slightly more optimistic. Analysts forecast SSS improvement compared to Q2 (-4.8%), anticipating a 100-200 basis points uptick, primarily due to normalized weather conditions boosting discretionary retailers’ performance. While staple retailers like CPALL and CPAXT are expected to maintain slightly positive SSS in Q3, discretionary retailers could see quarter-on-quarter growth of 3-5 percentage points. KKPS maintains Buy for HMPRO and CPALL.
Within the consumer staples segment, grocery retailers’ September SSS is projected to be similar to August, despite the timing shift of the Ghost Festival. Large-format stores are likely to be more heavily impacted by adverse weather and weak fresh food sales, while supermarkets and convenience stores should fare better. CPALL is expected to record low single-digit SSS growth, supported by promotional campaigns, while CPAXT’s Thailand arm may see a slight decline, offset by stronger performance from Lotus’s Malaysia.
The consumer discretionary segment is set to experience negative low to mid-single-digit SSS, reflecting weak foot traffic, sluggish construction activity, and reduced government spending. Still, Q3 should see an improvement of 300-500 basis points versus Q2 (-8.3%) as conditions normalize and tourist arrivals stabilize.
Looking ahead, Kiatnakin Phatra Securities is optimistic that the new government’s anticipated stimulus measures, such as the ‘half-half’ co-payment scheme expected in Q4, will bolster retail sector sentiment. Large-scale retail outlets may indirectly benefit from increased restocking activity among traditional retailers.
KKPS rates ‘BUY’ on CPALL, CRC and HMPRO with a target price at THB 70, THB 27.25 and THB 9.45 per share, respectively. Meanwhile, the firm rated CPAXT with ‘Hold’ recommendation with a target price at THB 29.50 per share.
