CPN – CPN: Takeaways from Khon Kaen trip

We went on a site visit to the newly opened Central Khonkaen Campus, a mixed-use project featuring a lifestyle mall, sold-out condominium, and GO Hotel. Leveraging Khon Kaen’s status as a growing regional hub, it successfully targets students and professionals with minimal impact on the original mall. Driven by resilient traffic, solid tenant sales, and residential transfers, we expects strong 3Q26F core earnings growth. Maintain OUTPERFORM rating with a mid-2027F DCF-based TP of Bt85 (7.2% WACC and 1.5% LTG).

Visiting Central Khonkaen Campus. We went on a site visit to the Central Khonkaen Campus project, which just opened in May 2026. This mixed-use development sits on a 30-rai plot, marking CPN’s second major shopping center in the province. The 3-story mall covers 20,000 sq.m. of NLA. It targets young people, healthcare staff, and over 45,000 students from the nearby Khon Kaen University. Key features include the Northeast’s first indoor garden, a workspace for about 300 students a day, and many new food and fashion brands. The residential part, PHYLL Khonkaen, is a 33-story condo with 583 units. It sold out in three days and will be finished in 2028. GO Hotel is the brand's first hotel in the Northeast, adding 75 rooms to the project. It serves business travelers, hospital visitors, and students' parents, reaching an occupancy rate of ~95% since opening.

Limited impact to original Central Khonkaen. When Central Khonkaen Campus opened in late May, the original Central Khonkaen saw a short-term traffic decline of 10-15% during the first two months (May to Jul). However, by Aug, traffic returned to normal levels. Brand overlap between the two locations is also low. The Campus location focuses on new brands in Khon Kaen, lifestyle concepts, and a large F&B area that makes up over one-third of its total space. Meanwhile, the original center houses larger retail stores and established main tenants.

Khon Kaen is a high potential city. Khon Kaen has great economic and strategic value as the administrative and business center of Isan. It hosts over 300 government agencies and drives high regional GDP. Recognized as a UNESCO city of learning, it is a key medical hub centered around Srinagarind Hospital. The hospital is expanding from 1,500 to 3,500 beds to help meet a regional target of 5,000 beds. It serves as a major MICE and event city, welcoming over 5mn visitors a year. This is supported by an international airport built to handle 5mn passengers a year. Long-term growth is backed by major infrastructure projects. These include high-speed and double-track railways, an inland container freight station (dry port), and an aviation maintenance, repair, and overhaul (MRO) center. In addition, teamwork among local business groups is making Khon Kaen Thailand's first model eco-city and a destination for medical wellness.

Expect 3Q26F core earnings to grow YoY and QoQ. This would be driven by the continuing YoY growth in mall traffic of 3-4% during Jul-Aug, as well as high single-digit growth in tenant sales. This is considered solid given the rising tensions between the US and Iran during the quarter. Furthermore, we expect the ongoing transfer of Dusit Residences units to continue supporting 3Q26F core earnings.

Risks and concerns. Key concern is weak domestic consumption. Key ESG risk is climate adaptation and mitigation that could negatively impact revenue, rising carbon offset costs and physical impact to its malls.