The share price of Central Retail Corporation Public Company Limited (SET: CRC) plunged 4.27% to THB 39.25 per share as the market was concerned over investment costs for the new business “GO Wholesale”.
Krungsri Capital Securities (KCS) stated that it has a “Neutral” view on the GO Wholesale as the move was expected since the beginning of this year. In KCS’ view, the launch of its new Go Wholesale branches this year will not put a significant burden on CRC’s CAPEX and its operating results in 2023.
KCS expected to see more downside than an upside to its net profit estimations in the first three years. The new business should create a new source of income, especially from hotels and restaurants, however, KCS was concerned over high competition in the business.
In addition, the brokerage firm estimated net profit growth to accelerate in 2024 to 9.9 billion baht (+21% YoY) after a full recovery of its business in Vietnam, while starting to realize income from its new business. The company should also benefit from lower electric bills throughout the year. Thus, KCS recommended “BUY” at a target price of THB 46.00 per share.