As per a report by KGI Securities, the analyst expects Central Retail Corporation Public Company Limited (SET: CRC) to announce a first-quarter 2025 normalized profit of 2.4 billion baht, marking a 7% year-over-year decline and a 21% drop from the previous quarter. This anticipated dip is attributed to seasonal factors and softer year-on-year earnings.
The decrease is further driven by reduced equity income following the share swap with GrabTaxi Holdings (Thailand) Co., Ltd., alongside surging financing costs. Despite a slight 2% sales growth fueled by store expansion and a 20 basis points increase in gross margin from a refined product mix, these gains fall short of compensating for the downturn.
In light of a tepid spending environment, same-store sales are expected to languish in the negative low single digits to low teens across all divisions barring the food sector in Thailand, which is projected to see a modest rise. The gross margin from sales is projected to rise by about 10 basis points year-on-year to 25.8%, driven by the strategic expansion of private brands. This approach is anticipated to counterbalance the growing sales share from Go! Wholesales, which traditionally operates on narrower margins.
Additionally, the economic landscape remains challenging, underpinned by uncertainties such as a potential downturn in tourist arrivals, recorded 9.5 million in the first quarter, representing a quarter of the full-year expectation by the analyst of 38 million, and factors like the impact of U.S. tariffs on Thailand’s gross domestic product (GDP).
KGI notes that an increase in U.S. tariffs could pressurize GDP growth, now expected to dwindle to between 2.0% and 2.3%, down from a prior forecast of 2.6%.
In response to these headwinds, CRC’s ambition of achieving a 6-10% sales growth across segments now seems daunting. Reflecting the softer sales outlook across various units, the analyst has adjusted its earnings projections for 2025-2026 downward by 3%. However, CRC’s normalized earnings are forecast to grow 4% year-on-year in 2025 and 9% in 2026.
Furthermore, KGI also adjusts the price-to-earnings ratio (PER) downward across sectors. The fashion sector’s PER is reduced from 22.0x to 13.0x in light of uncertain consumer demand and diminished tourist inflow. The food sector’s PER is trimmed from 26.0x to 22.0x amid competitive pressures and a weak spending sentiment, while the hardline sector’s PER is cut from 18.0x to 15.0x due to rising industry competition. Consequently, CRC’s weighted PER is revised to 17.0x from 23.0x.
As a result, KGI Securities maintains a ‘Neutral’ rating for CRC and revised the company’s target price for the end of 2025 to 25.00 baht per share, down from 35.00 baht.
