KGI Securities (Thailand) wrote in its analysis that Home Product Center Public Company Limited (SET: HMPRO) is bracing for a decline in 1Q26 earnings, both year-on-year and quarter-on-quarter.
The projected downturn is attributed to several factors: notably, very weak same-store sales growth (SSSG), softer gross margins due to seasonal supplier rebate recognition that typically occurs in Q4, and rising expenses linked to continued store expansion. Adding to these challenges is a high comparison base from last year’s Easy e-Receipt scheme, which pulled demand forward into 1Q25.
Quarter-to-date (QTD), HMPRO’s SSSG has remained negative—falling to the mid-teens for the HomePro format (down from -7.8% in 4Q25) and recording negative low- to mid-single digits for the Mega Home format (from -6.9% in 4Q25). Even though there was some improvement in consumer sentiment after Thailand’s recent general election, consumer spending has yet to show significant recovery.
Despite these challenges, HMPRO’s management remains confident in achieving a positive low-single-digit SSSG in 2026. This outlook contrasts with current assumptions of flat growth in 2025 and a 1% increase in 2026, according to KGI. The normalization of demand after last year’s scheme is expected to help sales regain momentum from 2Q26 onwards.
HMPRO is also banking on enhancements in product sourcing, a robust private-label strategy (targeting around 22% sales contribution from private labels for both HomePro and Mega Home in 2026), and expanded home service offerings to boost profitability. An annual gross margin expansion of 10–30 basis points is guided, ahead of the current conservative 10-basis-point estimate by the brokerage, while cost control also remains in focus.
KGI maintains its 2026 and 2027 earnings forecasts for HMPRO, believing its current projections for SSSG and gross margin are prudent compared to management’s optimistic targets. The brokerage firm reiterates that HMPRO’s earnings could continue to see normalized mid-single-digit growth rates through the period.
On the valuation front, KGI maintains an ‘Outperform’ rating and its end-2026 target price at THB 7.50 per share. This is based on a price-to-earnings ratio (PER) of 16.0x, which is half a standard deviation below the historical average of global peers.
HMPRO’s strong fundamentals are highlighted, with consistent dividend payments yielding around 6%, a high return on equity (ROE) of about 20%, robust net margins of approximately 9%, and a 14% upside to their target price.
