Maybank Gives Positive View on Thai Retail Sector, Citing Expected Strong 3Q22 Growth

Since July and August same-store sales growth (SSSG) trended higher due to a low base effect, consumer confidence rebounding, and price increases, Maybank Securities (Thailand) (MST) continues to hold a positive view on Thailand’s retail sector. The SSSG for September should likewise stay robust, leading to strong 3Q22E SSSG.

A rise in GPM on account of a shift in product mix and price increases is anticipated for the third quarter of 2022. Earnings in the retail sector in 3Q22 are expected to fall QoQ due to seasonal factors, but to soar YoY due to strong SSSG and improved profitability.

MST’s Top Pick is HMPRO (BUY, TP THB16.80) due to the company’s strong earnings recovery, which is supported by enhanced SSSG and margin improvement.

CRC, Home Pro, and 7-Eleven all had SSSGs in the positive range, with 50%, 25-28%, and 20-25%, respectively. The SSSSG for Malaysian stores of Mega Home and Home Pro was 6.8% and over 100%, respectively.

SSSG for Dohome, Makro, Global, BigC, and Lotus were 10-11%, 7-9%, 3-6%, 2%, and 1-3%, respectively. Store lockdowns and reduced hours in July and August 2021 contributed significantly to a rise in SSSG.

MST likes HMPRO for its resilient operations and concrete recovery in both sales and profitability. Revenue in 2022 is projected to break the all-time high set before the outbreak of Covid.