Kiatnakin Phatra Securities (KKPS) anticipates a slight year-on-year profit decrease by 2% for Home Product Center Public Company Limited (SET: HMPRO) in the first quarter of 2025. This expected contraction is attributed to reduced sales stemming from slower consumption, changes to a tax scheme, and fewer operating days. However, cost-saving measures are projected to partially offset this revenue dip.
Despite this short-term outlook, the brokerage firm maintains a “Buy” rating on HMPRO at a target price of THB10.45 per share, citing appealing valuation, dividend yield, and a share repurchase programme as mitigating factors. Furthermore, they believe post-earthquake home improvement demand in the Bangkok area, where HMPRO has a strong presence, will bolster sales later in the year.
KKPS anticipates a modest 2% year-on-year increase in consolidated retail sales this quarter, reaching 18 billion baht. This growth is despite an expected average same-store sales decline of around 2%, primarily due to a 3% drop at Homepro. Factors such as a weak consumption environment, reduced demand for cooling products, and specific impacts in Bangkok from altered tax allowances and fewer operating days are contributing to this dip. The gross margin is predicted to remain stable at 26.2%, leading to a 2% rise in gross profit. However, increased SG&A expenses from new store openings are projected to offset this, resulting in a flat year-on-year EBIT of 2.3 billion baht and a slightly lower EBIT margin of 12.7% from 13% in 1Q24.
Meanwhile, the firm anticipates a weak first-quarter result for Siam Global House Public Company Limited (SET: GLOBAL) in 2025 due to struggling retail operations, particularly in big-ticket construction-related spending. Based on discussions with the company, they foresee a slow recovery in same-store sales, leading to a downward revision of earnings estimates for 2025 onwards by 6-7%.
Consequently, the target price for GLOBAL’s stock has been lowered from THB 10.7 to THB 9.5, although a Neutral rating is maintained. This cautious outlook is driven by concerns over weak consumption and potential trade war impacts, alongside a less appealing current valuation compared to its competitors.
KKPS expects a year-on-year decrease of 7% in Siam Global House’s retail sales for the first quarter of 2025, primarily due to an expected 8% drop in same-store sales. This decline is attributed to weak overall consumption, particularly in major purchases like construction materials, which is also predicted to result in a flatter retail margin of 25%. Concurrently, selling, general, and administrative expenses are projected to rise by 2% due to new store openings, leading to an increased SG&A to sales ratio. Consequently, the analysis forecasts a 20% year-on-year reduction in earnings before interest and taxes, with the EBIT margin falling to 9.2%.
