Analysts Expect CRC to Return to Growth Path from 2H21 on, Assigning a “BUY” Rating

Analysts agreed on a “BUY” rating for Central Retail Corporation Public Company Limited (CRC). They predicted that if Thailand’s three-wave Covid-19 outbreak is solved and Covid vaccination is widely distributed, as a result, the country is safe to reopen. CRC’s performance will improve in the second half of the year. However, 2Q21 results are expected to be the weakest quarter of this year, with a steady recovery after that.

Despite this, CRC continues to enjoy support from its overseas branch  Vietnam’s Go Mall. Furthermore, the company plans to expand the Go Mall store to eight branches, indicating the company’s great confidence in Vietnam’s market potential.

 

Asia Plus Securities (ASPS) said that even though it was positive about CPN’s plan, the new wave of  Covid-19 would weaken same store sales (SSS) and gross margin. Thus, ASPS slashed 2021 earnings forecast by 49.7%, estimating 2021 profit at 3.1 billion baht (versus 46 billion baht in 2020); 2021 profit is projected to rebound mainly in 2H21 as spending and tourism (8% of sales) will improve thanks to vaccine distribution. ASPS cut 2022 forecast by 8.4% to reflect private-brand sales promotions and opening of new Go! Malls in Vietnam,  estimating 2022 profit to grow 102% from a low base in 2021 as all businesses are expected to recover.

ASPS has given a 2021 target price of 36.5 baht per share (DCF, 7.9% WACC, 2.5% long-term growth), plus upside from a plan to open Thai Watsadu in Vietnam. Buy for a potential rebound in 2H21.

    

Kasikorn Securities (KS) said that the CRC was less affected by the third Covid-19 outbreak than it was during the first wave a year earlier. Additionally, expediting the distribution of the Covid-19 vaccine would enhance consumer sentiment, in combination with the monetary stimulus packages that will be implemented in the second half of the year to boost public spending. This will give CRC a chance to revive after hitting the bottom in 2Q21.

Meanwhile, CRC’s success will be bolstered by business in Vietnam. Go Mall and Tops branches in Vietnam have consistently performed well in terms of revenue. Additionally, there are plans to increase the number of branches to reflect confidence in the Vietnam market.

Therefore, KS has given a target price of 39.5 baht per share. 

 

Country Group Securities (CGS) stated that the outlook for CRC results in 2Q21 remains clouded by the third round of the Covid-19 outbreak, which was a result of a decline in same-store sales due to shortened opening hours. However, shopping made through online platforms continues to boost revenue, even though they cannot completely compensate for the loss. Therefore, the second quarter of 2021 outcome is predicted to be the worst period of the year, before improving in the second half of the year. CGS has given a target price for CRC as high as 42.25 baht per share.