Bualuang Securities (BLS) indicated that structural margin expansion will continue to be the main driver of profit growth in the Thai retail sector through 2027. This positive momentum is supported by improvements in procurement efficiency, inventory management, and a more favourable sales mix.
Additionally, the recovery in the tourism sector, with an expected increase in both high-spending and shopping-oriented tourists, will provide further support. The critical issue for retailers is determining which companies can best capture the increased tourist spending.
Key points highlighted in the analysis include an anticipated 9% year-on-year rise in core profit for 3Q26, despite stable same-store sales. Margin expansion is expected to drive profit growth at a faster rate than sales, supported by improved procurement, inventory management, and a better sales mix. Profitability improvements are not limited to gross margin growth; top picks in the sector have shown better performance both in gross margin and in the selling and administrative expenses-to-sales ratio.
While the recovery in both domestic spending and tourism in 2027 is seen as an additional upside, it is not considered a necessity for the brokerage’s base-case estimates. Looking forward, the gains from increased tourist arrivals will depend on retailers’ ability to convert tourist spending into profit, which is driven by location, purchasing power, and the ability to attract tourist expenditure.
From an investment strategy perspective, the potential for upward stock revaluation will depend on demonstrable, ongoing margin expansion, recovery in consumer and tourism spending, and possibly increased dividend payments driven by stronger free cash flow.
Bualuang maintains an ‘Overweight’ stance on the retail sector, with top picks being CPALL, CRC, and CPN. CPALL is noted for its robust same-store sales growth, ongoing margin expansion, and strong cash flow, with a 2027 PER of just 12x. CRC’s profit growth is supported by margin expansion and is expected to benefit directly from tourist spending. CPN, with stable recurring income, will benefit further from tourist spending and expanding rental space.
On a sub-sector basis, Bualuang remains ‘Overweight’ on both essential and discretionary goods retailers but is ‘Underweight’ on home improvement retailers, where profit growth potential in 2027 is viewed as limited due to the waning of temporary margin expansion drivers.
Further recommendations are as follows: Buy BJC, CPALL, CPN, and CRC, with target prices of THB 19, THB 62, THB 80, and THB 34, respectively. Hold ratings are given to CPAXT and HMPRO, with target prices of THB 16 and THB 7, respectively. Sell recommendations are given for DOHOME and GLOBAL, with target prices of THB 3.20 and THB 6.60, respectively.
