CGS International Securities expects weaker sales for CP All Public Company Limited (SET: CPALL) in 2H25 due to lower tourist arrivals, however, a resilience in margin could bolster the company’s outlook in the long-term.
The brokerage firm expects 7.7% year-on-year net profit growth for CPALL in 2Q25. The profit gain is anticipated to be spurred by store expansion, a 40 basis points increase YoY in convenient stores’ gross margin.
The steady expansion of CPALL’s store are bolstered by a shift toward a combination of stronger-margin products including ready-to-eat meals and personal care products, and a contribution from CPAXT’s exceptional net profit growth (an 11% YoY growth)
Furthermore, with the shift towards higher margin products, convenience stores’ gross margin has continuously improved from 27.0% in 2Q22 to 29.4% in 1Q25.
However, same store sales growth are forecasted to contract by 0.6% for the second quarter of the year—the first decline since the pandemic. The factors for the downtrend include:
- A shrinking seasonal tailwind
- A nosediving Chinese arrival and earlier rainy season discouraging storefront visits
The headwind from the tourism sector is estimated to persist into the second half of the year following a sharp slide in arrivals. In April, the amount of foreign arrivals dropped 7.6% YoY, and plunged further in May and June. Tourists usually accounted for 6-8% of convenience stores’ sales
The securities firms reiterate the “Add” rating with a target price of THB61.50, although the firm reduced FY26 and FY27 net profit forecasts by 2.6% and 2.2% respectively in response to weaker CPAXT’s contribution.
CPALL is currently trading at 14.8 times of FY25 expected price to earning ratio, with standard deviation at 1.35 below its 3-year average.
