Asia Plus Securities (ASPS) recommends investing in the country’s reopening plays and retail stocks despite Thailand registering more than 10,000 Covid-19 cases per day in recent days. ASPS expects only a limited impact on those equities and believes that in the medium- to long-term, this group of stocks is still worth investing in.
In terms of retail stocks, ASPS selected Central Retail Corporation Plc. (SET: CRC) as the outstanding stock, forecasting 4Q21 net profit at THB2.34 billion (+175% YoY), as same-store sales (SSSG) are predicted to expand by 8.7% YoY on the strength of clothing sales in Italy, which have above-average margins. This would boost CRC’s sales and profit margins, resulting in a profit of THB37 million in 2021, comparable to the previous year but better than estimated.
Additionally, the prospect for CRC business recovery in 2022 remains favorable. SSSG sees a more than 25% increase in 1Q22 compared to the same period last year, as clothing sales continue to recover in Italy, as well as in Thailand, where it benefited from government stimulus measures such as Shop Dee Mee Kuen scheme (shopping with refunds), while in Vietnam, it profited from the local New Year festival (Tet Festival).
ASPS expects CRC to outperform its peers this year, since the company has already bottomed and is on track to return to pre-COVID levels in the near term. Recommend “BUY” with a target price of THB40.75.
Central Retail Corporation Plc. (SET: CRC) rose THB2.75/share or 8.03% to THB37.00/share in early Monday trading, with a trading value of THB1,305 million.
