It’s Time for “RS” to Shine Again!?
A sign to climb back to the top from RS. Will these key makers be able to turn RS around?
RS Public Company Limited’s or RS shares show a strong signal of recovery after hitting rock bottom at ฿14.00/share from “Magical cosmetic scandal” in the beginning of July. Currently, RS shares are trying to break the resistance level at ฿20.00/share, and aiming to reach its previous high at ฿35.75/share. The growth of RS in profit comes with its significant condition.
Starting from the 2Q18 financial statement that estimates 100-150% growth, having all the key makers like MPC (Multi-platform Commerce), Health & Beauty Product (H&B), and Home & Lifestyle Product (H&L), a new subsidiary of RS that has an average acceleration of growth rate at 70-80% and becoming the STAR of the franchise.
The marketing plan for Mr. Surachai Chetchotisal, the president of RS, is to gather the company’s assets, for example, Channel 8 or even celebrities on the channel to support and promote the new MPC business, resulting in low operation cost. This is to get an upper hand in the market competition, as well as increasing net profit.
However, a fragile point in this business is about how to maintain the health and beauty trend. It is hard to deny that this type of business is considered a “grow fast, yet sink fast” business. A risk from the cost of continuing or maintaining the trend are something to be proceeded with caution.
As for its media business, especially Channel 8, the advertising fee is 40,000 THB/min, which is 8,000 THB higher than before. Advertising ratio increases from 35% to 45%. Though, RS is sending a recovery signal, its advertising ratio is still lower than last year, which was 60%, because of transferring advertisement to MPC instead of RS.
Anyway, gross profit margin increases from 37% to 41% because of high margin on MPC product that results in higher sales.
Structural adjustment gives RS’s shares a lot of charm. A reverse trend in stock market of RS’s shares going down making this week turnaround just the beginning.
Whether RS can return to its glorious day at ฿35.75/share or not, the company may faces further obstacles.
Let’s see if SOMEONE will selloff RS of not.