Kiatnakin Phatra Securities (KKPS) expects retail sector momentum in Thailand to soften in May, with same-store sales (SSS) growth likely flattening after a 3% increase in April. The brokerage attributes this slowdown to geopolitical developments, notably higher commodity prices and increased transportation costs, which are putting pressure on consumer affordability.
The stockpiling demand that fueled growth in March and April is now subsiding, with the most pronounced effects expected in big-ticket discretionary categories, particularly among home improvement retailers.
Despite these pressures, certain segments within the retail sector are expected to maintain year-on-year growth. Consumer staples, small-ticket leisure spending, and shopping malls are likely to benefit from the recovering international tourism and more favorable weather conditions supporting visitor numbers.
In the case of overseas operations, particularly CRC Vietnam, KKPS anticipates sequential improvement, driven by a narrowing currency gap between the Thai baht and Vietnamese dong (VND).
Among the major players covered by KKPS, GLOBAL is expected to post the weakest SSS momentum for May. Conversely, CRC and MOSHI are anticipated to deliver sequential improvements. CRC stands out as KKPS’ top pick, underpinned by improving sales momentum and persistent cost discipline.
In the consumer staples space, grocery retailers are projected to see SSS performance similar to April, maintaining slightly positive growth. The food category—covering both fresh and dry goods—should continue with low single-digit gains. However, non-food segments, encompassing items like clothing, home products, and electrical appliances, are expected to remain weak, with softer sentiment dampening spending among lower-income consumers.
Due to their heavier exposure to non-food SKUs, hypermarkets are expected to report SSS declines in the low- to mid-single-digit range. In contrast, supermarkets such as CRC’s Tops and convenience store chains like CPALL’s 7-Eleven and Mini Big C are set to achieve SSS growth within the low- to mid-single-digit spectrum, supported by resilient demand for daily necessities.
Discretionary retailers are projected to face increasing headwinds from geopolitical factors in May, with SSS growth moderating from a 4% increase in April to roughly flat. The combination of rising transportation and commodity costs, along with fading stockpiling demand, is likely to dampen purchasing power.
This dynamic should result in a marked deceleration for home improvement retailers such as HMPRO and GLOBAL, with SSS expected to drop by 4-6 percentage points month-on-month as consumers delay significant purchases. Nevertheless, sales to government-related contractors should stay robust due to ongoing budget disbursements, particularly post-election.
Meanwhile, CRC’s fashion segment and other lifestyle-related retail categories are forecast to demonstrate sequential improvement, with SSS growth in the 0-5% range, buoyed by the ongoing tourism recovery and better consumer mobility.
Following these, KKPS has assigned ‘Buy’ ratings on CRC and CPALL, with target prices of THB 24.64 and THB 61.47, respectively, while giving ‘Neutral’ recommendations on HMPRO, GLOBAL, and CPAXT, with target prices of THB 7.58, THB 7.80, and THB 18.50, respectively.
