3Q26F net profit is expected at Bt1.3bn, flat YoY but -18% QoQ, with weak SSS partly offset by wider gross margin, supported by elevated product prices (except steel) and a higher mix of high-margin private-label products. HomePro’s October-to-date new billing orders grew 10% YoY, signaling a sharp recovery from the -2.8% YoY SSS in 3Q26F, driven by post-flood demand for home repair and cleaning products. We expect 4Q26 earnings to be the strongest quarter of the year, rising YoY and QoQ on positive SSS, store expansion and margin improvement. We maintain Outperform with a mid-2027 DCF TP of Bt8.2 (WACC 7.1%, LTG 1.5%).
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HMPRO – Unexciting 3Q26F, but recovery lies ahead
3Q26F net profit of Bt1.3bn, flat YoY but -18% QoQ. The YoY earnings stability reflects slightly higher sales and gross margin expansion, offset by higher SG&A/sales and lower other income. The QoQ decline is mainly seasonal.
3Q26F sales highlights. Revenue is set to rise 1% YoY on store expansion despite SSS contraction. We estimate 3Q26 SSS at -2.8% YoY for HomePro and -0.5% YoY for MegaHome (vs. -1.0% and -4.1% in 2Q26), pressured by: 1) a high-single-digit QoQ decline in steel prices, prompting customers to delay purchases; 2) a 1% cannibalization impact on HomePro SSS from the second Samui store; and 3) fragile purchasing power, heavy rains and late-September flooding, which reduced store traffic and delayed deliveries, installations and revenue recognition. Monthly SSS bottomed in August amid heavy rainfall, turned positive in the first half of September, but contracted again in late September due to flooding. In 3Q26, the company opened a new HomePro store in Min Buri (hybrid format, adjacent to a MegaHome store), bringing its total store count to 150 (+8% YoY, +1% QoQ).
3Q26F margin highlights. Gross margin is expected to expand 45bps YoY to 27.2%, supported by elevated product prices (except steel) and a higher private-label mix as consumers traded down, more than offsetting lower supplier rebates on weaker sales volume. Higher oil prices should have limited impact as most incremental logistics costs can be passed through to suppliers. SG&A/sales is set to rise 50bps YoY to 21.6%, with SG&A up 3.5% YoY on store expansion, outpacing sales growth of 1%, while utility costs remain stable. Other income is set to fall 1% YoY on lower vendor promotional support and service income, partly affected by late-September flooding.
Earnings outlook. HomePro’s October-to-date new billing orders are estimated at +10% YoY, driven by post-flood demand for home repair and cleaning products. This excludes late-September orders pending delivery and installation, which should be recognized in October. Bangkok and surrounding provinces account for nearly 40% of HomePro’s sales, making post-flood demand in these areas a key driver of the 4Q26 SSS recovery. Historically, sales in flood-affected areas have rebounded at a double-digit rate following floods, with the severe Hat Yai flooding in 4Q25 driving double-digit sales growth for around three months after the floods subsided. Despite weaker-than-expected 3Q26 SSS and earnings, stronger 4Q26TD SSS should offset the shortfall, keeping our 2026 earnings forecast unchanged. We expect 4Q26 earnings to mark the year’s best, rising YoY and QoQ on positive SSS, store expansion and margin improvement.
Key risks are changes in purchasing power and new government policies. Key ESG risks are energy & waste management, sustainable products (E) and product quality management, labor practices and data privacy (S).