Preview 4Q24F: Improving YoY and QoQ
We expect 4Q24F core profit to be 2024’s best at Bt2.8bn, +7% YoY from better sales and wider EBIT margin and +71% QoQ on seasonality. In January, we estimate SSS growth at 6% YoY (the sector’s best, with peers flat YoY on average), boosted by stronger SSS in Vietnam (positive calendar effect from Chinese New Year) amid stable SSS in Thailand (negative calendar effect from E-receipt) and weaker SSS in Italy (strong THB). We expect 1Q25F core profit to grow YoY from better sales and margin and be relatively stable QoQ from seasonality. We maintain Outperform with a mid-2025 DCF TP (WACC 7%, LT growth 2.5%) of Bt39.
Expect 4Q24F net profit of Bt2.8bn, -11% YoY but +31% QoQ. Without extra items, 4Q24F core profit is expected to be 2024F’s best at Bt2.8bn, +7% YoY and +71% QoQ. The improvement YoY will be backed by better sales and wider EBIT margin (mainly on lower SG&A/sales), with higher equity income outpacing higher effective tax rate. The rise QoQ was seasonal. We expect a 2024F DPS of Bt0.57, 40% dividend payout.
4Q24F highlights. Retail sales are expected to grow 5.5% YoY, from store expansion outpacing SSS contraction. We expect SSS (simple average by unit) to contract 1.3% YoY, better than -4% YoY in 3Q24, on better SSS growth in Thailand (72% of sales) at +1% YoY (vs -2% YoY in 3Q24) amid weak SSS growth in Vietnam (21% of sales) and Italy (7% of sales) at -8% YoY and -4% YoY (vs -6% YoY and -4% YoY in 3Q24) from THB appreciation at 8% YoY against the VND and 5% YoY against the EUR. In Thailand, we estimate SSS growth in the low single digits YoY in the fashion unit (rising sales from full reopening of Central Chidlom on Dec 12 after renovation) and the food unit, outpacing SSS contraction in the low to mid single digits YoY in the hardline unit. In Vietnam, SSS is set to contract 8% YoY in THB but be stable YoY in the VND (up in low single digits YoY in the food unit but down in high single digits YoY in the hardline unit). In Italy, SSS is set to fall 4% YoY in THB but +1% YoY in local currency (EUR). EBIT margin will rise 40bps YoY to 7.5% from lower SG&A/sales (-90bps YoY) off a slower rise in SG&A (+2% YoY) than in sales (+5.5% YoY) from lower lease expenses and well-controlled personnel and utilities expenses. This will outstrip a 35 bps narrowing in gross margin YoY from a less favorable sales mix with more low-margin retail sales in the food unit (Go Wholesale) and the fashion unit (cautious consumer spending on value-oriented products) and some adverse effect from store renovations in the rental business. Equity income is estimated to grow YoY with better contribution from Grab Food (off 4Q23’s low base, from higher service, management and software fees). Effective tax rate is expected at 23% (vs 13% in 4Q23 and 21% in 3Q24).
SSS in January to be the sector’s best. In January, we estimate 6% YoY growth in SSS (flat YoY on average at retailers under coverage), boosted by stronger SSS in Vietnam at +>30% YoY (THB) from positive calendar effect from Chinese New Year (Jan 2025 vs Feb 2024), amid stable SSS in Thailand YoY from a negative calendar effect from government stimulus (E-receipt program on Jan 16-31, 2025 vs Jan 1-31, 2024) and weaker SSS in Italy to -8.5% YoY (THB) from currency translation (appreciation of THB against EUR at 10% YoY in Jan vs 5% YoY in 4Q24). In Thailand, SSS grew 0.5% YoY in the fashion unit and 8% YoY in the food unit but fell 8% YoY in the hardline unit (-2.5% YoY in Thai Wasadu and ->10% YoY in Power Buy). In Vietnam, SSS grew >30% YoY in the food unit and 2.5% YoY in the hardline unit.
Key risks are changes in government policies and purchasing power. Key ESG risks are energy & waste management, sustainable products (E) and product quality management, labor practices and data privacy (S).
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