KGI Securities noted that Home Product Center Public Company Limited (SET: HMPRO) has mentioned the challenging economic environment’s impact on consumer spending, acknowledging a need for more government intervention to stimulate the economy. After experiencing a slight contraction in same-store sales during the first two months of 2025, HMPRO plans to pivot its strategies to achieve its 2-3% growth forecast for the year, including:
- Expanding its hybrid store models, which integrate HomePro and MegaHome formats to reduce construction costs and widen customer reach
- Proactively engaging customers with new offerings
- Enhancing its service ecosystem
On the profitability front, HMPRO aims to strengthen its house brand approach, optimize product sourcing, and expand its assortment, with a goal to increase its gross margin by 20 basis points this year. The company is also focused on maintaining cost efficiency, aiming to keep the SG&A to sales ratio stable in 2025.
These strategic directions align well with KGI’s current projections. Reflecting 2024’s results and updated expansion plans, KGI adjusted its earnings forecasts for 2025 and 2026 upward by 1% and 3%, respectively. Additionally, the analyst anticipated HMPRO to see an annual earnings growth of approximately 8% over this period.
KGI projects that HMPRO’s earnings growth will stabilize, but potential risks from heightened competition could lead to a re-evaluation of the company’s price-to-earnings ratio (PER). Historically, HMPRO’s same-store sales growth has been in the low-to-mid-single digits, with a previous peak in earnings during 2016-2019. Future earnings are expected to advance at a mid-to-high-single-digit rate.
However, the company faces competitive pressures from both domestic and international players, which have been affecting sales per store, decreasing from 633 million baht to 527 million baht in 2024. Consequently, KGI has adjusted HMPRO’s PER band to 18.0x, using the average of its global peers, to better reflect industry changes and growth outlook.
KGI maintains an ‘Outperform’ rating for HMPRO and revised the target price for the end of 2025 to 9.60 baht per share, down from 11.50 baht, based on the recalibrated PER. Despite this more cautious stance, the new target still provides a 15% upside from the recent closing price.
