Bualuang Securities (BLS) stated that CP All Public Company Limited (SET: CPALL) is delivering stronger results from its core business, supported by continued same-store sales growth, ongoing gross margin expansion, and solid free cash flow (FCF). The brokerage sees potential upside from higher shareholder returns and value creation through CPALL’s branch network.
BLS noted that CPALL’s earnings growth does not need to rely on a rapid recovery in consumption. Despite weak consumer spending, the analyst found that 7-Eleven’s same-store sales growth from 3Q26 to date has been around 1%, while store expansion continues to support total sales growth.
Product gross margin rose 20 basis points year-on-year in the first half of 2026, driven by a higher sales mix of high-margin products such as ready-to-eat meals, beverages, and personal care items. ROE also improved to 23%, reflecting stronger profitability without increasing leverage. BLS expects CPALL’s core profit to grow 11% YoY in 2027, mainly from operational efficiency rather than a consumption rebound.
The brokerage estimated CPALL’s FCF at THB 33 – 37 billion per year during 2026 – 2028, while its balance sheet remains healthy. Net debt-to-equity is expected at only 0.8 times in 2026, well below the creditor covenant of 2.0 times.
BLS expects CPALL’s dividend payout ratio at 53%, implying a 2027 dividend yield of 4.0%. Every 10% increase in the payout ratio would lift the dividend yield by 0.7%, while reducing post-dividend FCF by only THB 3 billion. If the payout ratio rises to 70%, the dividend yield would increase to 5.3%, while CPALL would still retain THB 11 – 12 billion in annual FCF, enough to continue debt reduction.
BLS also highlighted ALL PharmaSee as another opportunity for CPALL to monetize its store network and digital ecosystem. After Thailand’s Food and Drug Administration approved telepharmacy services in June 2026, CPALL began trialing the service in 2,000 branches, with 300 pharmacists providing consultations and medicine delivery through 7-Eleven and 7App.
Management indicated that medicine sales typically account for 2-3% of 7-Eleven sales. Medicine carries a gross margin of around 40%, compared with an average product gross margin of 28%. BLS’ scenario analysis suggests that every 1% increase in the medicine sales mix would raise overall gross margin by 12 basis points, compared with CPALL’s annual gross margin expansion target of 10 – 20 basis points.
At a 2027 PER of only 12 times, 1.5 standard deviations below its long-term average, BLS sees CPALL’s valuation as attractive. Based on projected 2027 earnings growth of 11% YoY, the stock trades at a PEG ratio of 1.1 times, also 1.5 standard deviations below its long-term average.
BLS said the market has yet to fully price in CPALL’s strong operations, improving profitability, solid FCF, and continued debt reduction. A higher dividend payout and successful expansion of ALL PharmaSee could further support the share price, while both factors have not yet been included in BLS’ estimates.
The securities firm maintains a “Buy” recommendation for CPALL with a target price of THB 62 per share.
