Analysts Lower CPAXT’s Target Price, 2023 Profit Forecasts amid Sluggish Consumer Spending

Analysts cut CP Axtra Pcl. (SET: CPAXT) price target and profit forecasts for 2023-24 to reflect sluggish consumer spending, while having to incur significant expenses on online sales channel development in the second half of this year.

In 2Q23, CPAXT reported a net profit of THB1,515 million, decreasing slightly by 3.63% from THB1,572 million in 2Q22. Total revenues for the quarter was at THB121,612 million, an increase of THB2,942 million or 2.5% year-on-year. While revenue from sales of goods was THB115,980 million, which increased by THB2,617 million or 2.3% from the same quarter last year. Supportively, the revenue from wholesale business increased of 7.4% from the same quarter last year, owing to an increase in-stores, Online, and Omni Channel sales of Makro-Thailand, along with an expansion of Makro-International across all countries. However, the revenue from the retail business slightly decreased 3.3% YoY, owing to a strategic shift in the operational strategy, as well as a reduction in operating hours across certain locations. Meanwhile, the proportion of Online and Omni Channel sales of the Company and its subsidiaries accounted for 12.4% of total sales.

Daol Securities is still recommending a BUY on CPAXT, yet have lowered its price target from THB45.00 to THB40.00. The brokerage firm also lowered its earnings projections for CPAXT to THB9.1 billion (+18% YoY) and THB12.0 billion (+27% YoY) for 2023 and 2024, respectively. Slow quarterly consumer spending led to a reduction in both pricing targets and profit forecasts. Same-store sales are expected to fall further in the retail industry, while wholesale saw a modest growth of 2% to 3%. In addition, CPAXT would most certainly continue to spend heavily on developing its online sales channel during 2H23.