A Sharp decline in CP AXTRA Public Company Limited (SET: CPAXT) and CP ALL Public Company Limited (SET: CPALL) share prices dragged the Thai stock market down in the early session on Monday following market concerns over the investment in the property business of The Forestias.
The share price of CPAXT plunged as much as 19.5% to THB28.00 per share, while CPALL fell 9.6% to THB57.00 per share.
Meanwhile, the SET Index fell 15 points or around 1% to 1,416.81 points.
CP Axtra has disclosed further statement through the Stock Exchange of Thailand to reiterate its careful assessment and consideration on the investment in Happitat at the Forestias that raised concerns in the market over the valuation and appropriateness of this move, stating that the Board of Directors and Audit Committee both agreed upon the investment.
Krungsri Securities (KSS) stated that the project will be almost all funded with debt. It will be completed in 1Q26 and will turn EBITDA positive in 2026. It will be EBIT positive in 2027 and will not be profitable at the net income level until 2029. KSS stated that the investment could pressure profit in 2025, as it will have to incur interest cost (3.8% interest rate, THB304m interest expense) while the project will not be operational until 2026. Net of tax, this could lower our FY25F core profit by 2.2%.
MQDC is a company affiliated with the CP Group, the parent company of CPALL who holds 59.9% of CPAXT. Given CPAXT’s emphasis on growing rental income, KSS believes there could be more partnerships with MQDC in the future.
Additionally, KSS maintained a ‘Neutral’ rating on CPAXT at a target price of THB33.00 per share.
Pi Securities has a negative outlook on the investment, seeing short-term impact to expenses around 300-400 million baht, translating to a net profit impact of around 2-3% in 2025. With mid-term investment risks and high competition, Pi cuts recommendation from ‘Buy’ to ‘Hold’ at a target price of THB37.00 per share.
UOB Kay Hian Securities (Thailand) has expressed a negative outlook on the CPAXT deal for three main reasons:
1) The projected adverse impact on CPAXT’s profit in 2025, which is expected to be around 3%, alongside anticipated additional losses during the initial phase of operations.
2) Intense competition in the Bangna area, which includes Mega Bangna, Central Bangna, and the anticipated opening of Bangkok Mall in 2027.
3) Concerns about the development of new projects that represent a “new market” for CPAXT, specifically in the realm of mixed-use projects and leasing office spaces.
Despite negative views from other analysts, some strategists maintained their optimism about the investment and CPAXT. Bualuang Securities (BLS) stated that the investment in the mixed-use project represents a new segment for CPAXT, leading to an anticipated recognition of losses during the first 1-3 years.
The firm estimates the impact on profits to be around 2-4% per year. However, BLS sees a stock price decline as an opportunity to accumulate, as the normal profit outlook for 2025-2026 remains robust with an average growth of 18%. Additionally, the risk of needing to invest in additional projects appears to be limited. The firm recommended ‘Buy’ at a target price of THB40.00 per share.
Additionally, Kasikorn Securities expects additional interest expenses of 300 million baht in 2025 and higher CAPEX, resulting in declining net profit of 2.9%/6.4% in 2025-26, respectively. The firm slightly cut target price from THB38.6 ot THB38.5 per share and maintained the “Buy” recommendation.
