CGS International Securities (Thailand) (CGSI) wrote in a note after the 2025 Open House held by CPAXT that unveiled their plans for sustainable growth.
In the 2025 Open House, CP Axtra Public Company Limited (SET: CPAXT) unveiled an ambitious roadmap aimed at sustainable expansion through eight key strategic initiatives. The company targets a transformation across sales channels, cost efficiency, product offerings, and regional reach to significantly boost its market position by the end of the decade.
All-Channel Growth Initiative to Propel Sales Expansion
CPAXT is aiming for a notable increase in contributions from Omni-channel and e-commerce avenues, striving to grow their share from 18% of total sales in fiscal year 2024 to 50% by fiscal year 2029. Overall sales are expected to see a high-single-digit rise in FY25F, driven largely by same-store sales growth and an assertive store expansion strategy that includes opening 7-12 large-format stores and 200 Lotus’s go fresh outlets to penetrate smaller local communities. The company sees a potential of 70 large stores nationwide in its long-term outlook.
Efficiency Gains and Cost Savings Through Strategic Amalgamation
Emphasizing cost reductions, CPAXT’s amalgamation efforts are forecasted to deliver THB2.5 billion in savings in FY25F and an additional THB2.7 billion in FY26F, ahead of previous timelines. These efficiencies are set to enhance gross margins and reduce operating expenses, offering a substantial boost to profitability.
Margin Optimization via High-Profit Merchandise
The company will focus on merchandise with higher margins, such as wellness and private-label products, aiming for a 35 basis point margin uplift in FY25. This approach aligns with consumer trends favoring health and beauty, anticipating improved profitability.
Focus on Fresh Food Market Leadership
CPAXT is positioning itself as a leader in the fresh food sector, targeting to increase its share from 35% of sales in FY24 to 50% by FY29F. The emphasis on ready-to-eat and ready-to-cook products addresses growing consumer demand for convenience.
Enhancing Malls and Expanding Customer Engagement
Plans to revamp its existing malls are underway, with an addition of vibrant tenant mixes and dynamic spaces. CPAXT aims to expand its net leasable area by 240,000 sqm over the next few years, enhancing customer experience and engagement.
Harnessing AI for Inclusive Growth and Operational Efficiency
Leveraging AI for demand forecasting, CPAXT plans to optimize inventory and streamline operations, promoting inclusive development alongside technological advancements.
Regional Expansion into High-Growth Markets
CPAXT plans to broaden its footprint by venturing into countries with high GDP growth, leveraging its existing scale and expertise to capitalize on promising emerging market opportunities.
Synergy Between People and Technology
The company is committed to integrating technological advancements such as automation and energy efficiency with a strong organizational culture to enhance operational performance. By fostering this synergy, CPAXT aims to improve sustainability and efficiency, ensuring it remains ahead in a rapidly evolving market environment.
Financial Outlook
For FY25, CPAXT anticipates high-single-digit total sales growth and a 60bp gross margin improvement, with double-digit EBITDA growth. Planned capital expenditure ranges from THB24-28 billion.
CGSI Comment
Following the report, CGSI commented that the ambitious single-digit SSSG goal could face headwinds amid a challenging consumption climate, and the projected margin improvements via fresh food expansion may present additional challenges due to the inherently lower margins of these products compared to their non-food counterparts.
