Land and Houses Securities (LHS) has downgraded Central Retail Corporation Public Company Limited (SET: CRC) to “Speculative Buy” from “Buy,” saying the share price already reflects much of its strong earnings growth outlook, leaving limited near-term upside. The brokerage set an end-2027 target price of THB 36.25 per share.
LHS forecasts CRC’s third-quarter 2026 core profit at THB 1.79 billion, up 37.9% year-on-year but down 15.3% quarter-on-quarter. Sales and service revenue is projected at THB 56.5 billion, increasing 4.2% annually and 1.9% sequentially, supported by store expansion and stronger food sales.
Same-store sales growth (SSSG) for the Food business is expected to accelerate to 7.0% from 3.0% in the previous quarter, driven by Tops campaigns, improving GO! Wholesale sales and stockpiling demand during flooding late in the quarter.
For the Fashion segment, SSSG is forecast to turn positive at 1.0%, compared with a 1.0% contraction previously, as the World Cup stimulates demand for sports and lifestyle products. The Hardline group, excluding Nguyen Kim, is expected to record a 2.5% decline amid weak purchasing power and lower steel prices.
LHS projects a third-quarter gross profit margin of 27.20%, up 52 basis points YoY, supported by merchandise management, a greater contribution from higher-margin products and the absence of fashion clearance sales seen a year earlier.
However, the margin is expected to fall 43 basis points QoQ as benefits from low-cost Hardline inventory fade.
Selling, general and administrative expenses as a proportion of total revenue are forecast to decline to 27.18%, from 27.24% a year earlier and 27.41% in the preceding quarter. Lower interest expenses following the Rinascente sale should also help lift the core profit margin to 2.94%, up 90 basis points annually.
LHS estimates overall October quarter-to-date SSSG at approximately 4%. Hardline is leading the recovery with growth of around 7 – 9%, supported by post-flood cleaning, home repairs and replacement purchases.
Food sales are estimated to grow 4 – 6%, while Fashion sales could contract 1 – 3% as rain and flooding weigh on store traffic.
The brokerage expects fourth-quarter core profit to recover sequentially on seasonal sales strength and improving revenue, reducing the fixed-cost burden relative to sales. However, the sustainability of Hardline demand after post-flood repairs remains a key consideration.
LHS expects core profit growth to slow to 8.4% in 2027. Its nine-month 2026 core profit forecast represents 69% of its full-year estimate.
Key risks include geopolitical uncertainty, global inflation affecting merchandise and energy costs, fragile purchasing power amid Thai household debt of 86% of GDP, and changing purchasing behaviour in Vietnam.
