Comprehensive Analysis of Central Retail Corporation and Peer Companies

Broker: Maybank Securities (Thailand) PCL
Date: November 9, 2024

Introduction

In this detailed report, we dive into the robust performance and future projections of Central Retail Corporation (CRC), a leading player in Thailand’s retail industry. Additionally, we explore the performance of its peer companies, offering a comprehensive analysis that covers various aspects of their operations, financial health, and market positioning.

Central Retail Corporation (CRC)

Multi-Format Channel and Expansion Strategy

CRC has been a pioneer in the retail business in Thailand for over 76 years. The company operates a multi-category and multi-format retail business, including fashion, hardline, and food segments in Thailand, Vietnam, and Italy. CRC’s multi-format sales channels and store expansions are pivotal to its growth strategy. The company plans to open 200-300 stores annually in Thailand and Vietnam over the next five years.

Financial Performance and Projections

Despite challenges from the shift to online shopping and stiff competition, CRC is expected to deliver 13.5% earnings growth in FY25E. The company’s valuation is considered undemanding at 19.4x FY25E P/E, with near-term catalysts including festive season earnings recovery and the completion of renovations at its flagship stores. CRC’s EBITDA is projected to remain above THB15 billion per annum from FY24 onwards.

Segment Analysis

Fashion

Fashion sales contribute 28.2% to CRC’s total sales. The segment is anticipated to experience significant growth driven by the return of Central Chidlom and Rinascente Milan after extensive renovations. The company also introduced new stores and re-launched its flagship sports outlet, Supersports, at Central Chidlom.

Hardline

The hardline segment, contributing 33.4% to total sales, is projected to grow with the addition of new Thaiwatsadu and BnB Home stores. The company targets 8-10 store expansions per year, with private label sales expected to reach 22-25% in the next five years.

Food

Food sales account for 38.4% of CRC’s total sales. The company has rebranded its food business under the “Tops” brand, with plans to open more GO Wholesale and GO! Hypermarket stores in Thailand and Vietnam. The food segment is expected to grow by 6-7% annually, driven by store expansion and improving consumption in Vietnam.

Peer Companies Analysis

Central Pattana (CPN TB)

Overview

Central Pattana (CPN) is a leading property developer and operator of shopping centers in Thailand. The company has a wide range of property types, including retail, office, residential, and hotel properties.

Financial Performance

CPN’s valuation stands at a P/E of 17.3x FY24E, with a target price of THB79.00. The company’s EBITDA and net profit margins are expected to improve, driven by the expansion of its retail and residential projects.

Central Plaza Hotel (CENTEL TB)

Overview

Central Plaza Hotel (CENTEL) operates hotels and restaurants across Thailand and internationally. The company owns and manages a diverse portfolio of properties, catering to various market segments.

Financial Performance

CENTEL is projected to achieve a P/E of 35.0x FY24E, with a target price of THB49.00. The company’s revenue and EBITDA are expected to grow, driven by the recovery in tourism and expansion of its hotel portfolio.

7-Eleven Malaysia Holdings (SEM MK)

Overview

7-Eleven Malaysia Holdings operates convenience stores under the 7-Eleven brand in Malaysia. The company focuses on offering a wide range of products and services to meet the daily needs of consumers.

Financial Performance

SEM’s valuation is projected at a P/E of 27.1x FY24E, with a target price of MYR1.97. The company’s revenue and net profit margins are expected to improve, driven by store expansions and increased consumer spending.

MR. DIY (MRDIY MK)

Overview

MR. DIY is a home improvement retailer in Malaysia, offering a wide range of products across various categories, including hardware, household, electrical, and stationery.

Financial Performance

MRDIY’s valuation stands at a P/E of 27.1x FY24E, with a target price of MYR2.45. The company’s revenue and EBITDA are expected to grow, driven by store expansions and increasing demand for home improvement products.

Conclusion

Central Retail Corporation (CRC) and its peer companies continue to demonstrate strong growth potential despite market challenges. CRC’s multi-format channel strategy, coupled with ongoing store expansions and renovations, positions it well for future growth. Peer companies like Central Pattana, Central Plaza Hotel, 7-Eleven Malaysia Holdings, and MR. DIY also show promising financial performance driven by strategic expansions and market recovery.