1. business and industrial
2. company
3. earnings

Equity Talk
Wednesday, May 20, 2015
Analyst Meeting
CP All
CPALL
Rec. : BUY
More solid plan to decrease shares in MAKRO
We are still optimistic that CPALL's profit would grow significantly for the remainder
of the year. Progress on decrease of CPALL's shareholding in MAKRO has been
made; this would relieve CPALL's debt burden and lower risk of capital increase, and
strengthen its fundamental factors.
 Remain optimistic. Profit to grow significantly
According to the analyst meeting yesterday, we are still optimistic that CPALL's
profit would grow significantly for the remainder of the year. Although same store
sales would remain weak as a result of the slowing economy (+0.3%yoy in 1Q15),
it would be compensated by high profit margin, and financial cost is expected to
stay low like in 1Q15 and decrease remarkably from the same period last year;
electricity cost (9% of SG&A) would drop as May-August Ft rate has been lowered
by B0.10/unit. Besides, CPALL still plans to open at least 600 new branches this
year. Shared profit from MAKRO has also grown significantly as 13 branches were
opened in 2014 (record high) and 12 new branches would be opened this year.
CPALL's same store sales growth is also projected 3-4%yoy, the strongest in the
sector.
 Planning to decrease shares in MAKRO
CPALL has officially announced its plan to decrease its shareholding in MAKRO from
97.88%, already submitted the registration statement for the offer for sales of the
shares to the general public and the draft prospectus to the Office of the Securities
and Exchange Commission (SEC) like IPO. The tender offer price and the list of
people with rights to buy have not been announced yet and will be revealed later.
This issue has positive sentiment because selling of MAKRO's shares can partially
reduce CPALL's debt from the total of B187bn (4.9x net gearing), B27bn from shortterm debt and long-term debt from banks that can be repaid anytime and another
B160bn from bonds that CPALL has to repay on maturity date (but some is allowed
to be repaid before the maturity date). Considering the short-term debt and longterm debt from banks that can be repaid anytime, CPALL is projected to decrease its
shares in MAKRO by 10-13% (at the price of B42-45, close to the cost). In this
case, CPALL's net profit is projected to rise by 2.1-3.3% since lower interest
expense would compensate for weaker shared from MAKRO after consolidating
financial statement; this has not been included in our forecast yet.
 Positive sentiment for CPALL, MAKRO
Source : ASPS Research
FY13A
272,286
10,503
1.17
38.9
0.90
2.0
14.2
37.6
24.7
FY14A
357,766
10,154
1.13
40.3
0.80
1.8
12.4
34.1
30.4
Upside : 16.5%
Dividend Yield : 1.8%
Total Return : 18.3%
Market Cap. (Bm) : 408,731
CG Score: NR.
Technical Chart
ASPS vs IAA consensus
ASP
2015F
1.49
2016F
1.98
EPS (B)
This is a positive sentiment for both CPALL and MAKRO. For MAKRO, this is a good
entry point for short-term speculation; its price is currently lower than CPALL's cost
of B41-42 (Fx loss included), likely to rise. For CPALL, its financial position would
improve, lowering risk of capital increase, strengthening its fundamental factors.
The share price would return to the premium level in the future.
Key Data
FY: Dec 31
Sales & Services (Bm)
Net Profit (Bm)
Norm EPS (B)
PER (x)
DPS (B)
Dividend Yield (%)
PBV (x)
ROAE (%)
EV/EBITDA
Current Price (B): 45.50
Target Price (B): 53.00
FY15F
403,828
13,360
1.49
30.6
0.80
1.8
11.1
39.4
22.4
FY16F
459,079
17,778
1.98
23.0
0.80
1.8
8.6
42.1
17.9
Cons
1.47
1.83
% diff
1%
8%
Source : IAA consensus and ASPS
FY17F
518,258
24,098
2.68
17.0
0.80
1.8
6.3
43.0
13.8
Kawee Manitsupavong
License No.: 003974
kawee@asiaplus.co.th
Anuwat Srikajornratkul
License No.: 045698
anuwat@asiaplus.co.th
This report is a rough translation of one of our Thai-language research products. It is produced primarily with time efficiency in mind, so that English-reading clients can see what the main recommendations are from our Thai-language research
team. Given that this is a rough-and-ready translation, Asia Plus Securities pcl cannot be held responsible for translation inaccuracies.) The reports and information contained herein are compiled from public data sources and our analysts'
interviews with executives of listed companies. They are presented for informational purposes only and not to be deemed as solicitations to buy or sell any securities. Best attempts have been made to verify information from these vast sources, but
we cannot guarantee their accuracy, adequacy, completeness and timeliness. The analyses and comments presented herein are opinions of our analysts and do not necessarily reflect the views of Asia Plus Securities.
1Q15 Earnings Result
Key Data (Bm)
Sales & service
Cost of sales & service
SG&A
Other income
Net profit
EPS
Gross profit margin
SG&A/Sales
Normalized profit margin
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15 %QoQ %YoY1Q15's MAKRO 1Q15's CPALL only
82,351
88,414
86,158
88,945 87,672 94,991 95,554
0.6% 10.9%
39,588
55,966 357,766 403,828
12.9%
65,138
70,475
68,152
70,031 68,842 74,419 75,125
0.9% 10.2%
35,011
40,114 281,443 319,767
13.6%
16,436
17,743
16,430
16,885 16,733 18,742 17,085
-8.8%
3.9%
3,805
3,566
2,991
3,188
3,392
3,587
3,227 -10.0%
7.9%
188
2,660
2,008
2,699
2,252
2,688
2,509
3,408
35.8% 26.0%
1,539
0.30
0.28
0.38
35.8% 26.0%
2,742
14,343
2014
2015F % YoY
68,809
73,978
3,039
13,158
14,236
8.2%
1,869
10,154
13,360
31.6%
31.6%
0.30
0.22
0.30
0.25
n.a.
0.00
1.13
1.49
20.9%
20.3%
20.9%
21.3%
21.5% 21.7% 21.4%
11.6%
28.3%
21.3%
20.8%
20.0%
20.1%
19.1%
19.0%
19.1% 19.7% 17.9%
6.9%
25.6%
19.2%
18.3%
3.2%
2.3%
3.1%
2.5%
3.9%
3.3%
2.8%
3.3%
3.1%
2.6%
3.6%
7.5%
Source: Financial Statement / ASPS Research
Same Store Sales Growth
Branches
สาขา
8000
23.0%
25%
20%
10.0%
10.9%
8.2%
7.4%
518
6000
10.5%
11.8%
8.8%
8.1%
6.9%
4.7%4.4%
4000
4.6%
3000
1.5%
5.9%
0%
5000
7.6%
5%
0.5%
-1.1%
0.3%
1.3%
1Q 09
2Q 09
3Q 09
4Q 09
1Q 10
2Q 10
3Q 10
4Q 10
1Q 11
2Q 11
3Q 11
4Q 11
1Q 12
2Q 12
3Q 12
4Q 12
1Q 13
2Q 13
3Q 13
4Q 13
1Q 14
2Q 14
3Q 14
4Q 14
1Q 15
-5%
641
588
7000
16.0%
14.3%
12.6%
15%
10%
No. of Stores
Same Store Sales Growth
216
1,449
255
1,562
346
1,813
2,130
2,541
466
2,884
3,320
2000
1000
3,593
3,916
2,671
2,794
2,834
2,926
2,984
3,570
2,462
3,248
2,119
2006
2007
2008
2009
2010
2011
2012
2013
2014
Franchise
Sub area
0
-4.5%
-3.6%
Source :ASPS Research
294
415
Corporate
Source :ASPS Research
Food vs Non-Food Sales
Key Risk
Gross margin
40%
100%
1. The economy has been weaker than expected.
30%
70%
2. Aggressive branch expansion may weaken same store
sales and result in cannibalization.
20%
40%
3. Temperature and weather can affect beverage sales.
10%
-20%
2006
2007
2008
2009
2010
2011
2012
2013
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
10%
Food
Source :ASPS Research
Non Food
0%
Non f ood
Beverage and Food service
Snack
(Chilled food,
Bakery,
Count er
fastf ood)
Source :ASPS Research
2015-2017F Key Earning Forecast
Profit & Loss Stagement (million Baht)
Ended Dec31
Sales
Cost of good sold
Gross profit
Selling and administrative expense
Interest expense
Other expense
Other income
EBT
Tax
Minority interest
Non recurring items
Net profit
Norm profit
Norm EPS
Sales growth (YoY)
Norm profit growth (YoY)
Gross margin
Norm margin
Statement of Income (million Baht)
Quaterly
Sales
Cost of good sold
Gross profit
Selling and administrative expense
Interest expense
Other expense
Other income
EBT
Tax
Minority interest
Non recurring items
Net profit
Norm profit
Statement of Cash Flows (million Baht)
2014
2015F
2016F
2017F Ended Dec31
357,766 403,828 459,079 518,258 Cash flows from operating activities
(281,443) (319,767) (363,254) (409,181) Net profit
76,323
84,061
95,824 109,077 Adjustments :
68,809
73,999
82,445
91,578 Depreciation and amortisation
8,518
10,131
9,805
8,986
1,893
Others
13,158
17,077
19,021
22,059 Changes in operating assets (increase) decrease
12,153
17,008
22,596
30,573 Net cash provided by operating activities
2,258
3,402
4,519
6,115 Cash flows from investing activities
(119)
(246)
(299)
(360) Sale (Purchase) of current investments
10,154
10,154
1.13
13,360
13,360
1.49
17,778
17,778
1.98
24,098
24,098
2.68
31.4%
-3.3%
21.3%
2.8%
12.9%
31.6%
20.8%
3.3%
13.7%
33.1%
20.9%
3.9%
12.9%
35.5%
21.0%
4.6%
2Q14
88,945
(70,031)
18,915
(16,885)
(2,398)
3,188
2,819
(542)
(26)
1
2,252
2,252
3Q14
87,672
(68,842)
18,831
(16,733)
(2,415)
3,392
3,075
(596)
(28)
237
2,688
2,688
4Q14
94,991
(74,419)
20,572
(18,742)
(2,360)
3,587
3,057
(476)
(33)
(38)
2,509
2,509
1Q15
95,554
(75,125)
20,429
(17,085)
(2,263)
3,227
4,307
(842)
(37)
(19)
3,408
3,408
74.1%
-5.0%
-2.7%
6.5%
0.6%
-0.2%
7.4%
1.4%
0.4%
2014
0.70
406.92
13.38
4.94
5.09
34.1%
3.1%
2015F
0.65
423.11
13.88
5.49
4.29
39.4%
4.1%
2016F
0.53
430.80
14.21
6.01
3.09
42.1%
5.4%
Sales growth (YoY)
Gross profit growth (YoY)
Net profit growth (YoY)
Financial ratio
Ended Dec 31
Current ratio
A/R turnover
Inventory turnover
A/P turnover
Debt to Equity ratio
ROAA
ROAE
Source: Financial Statement / ASPS Research
2015F
2016F
2017F
13,458
15,486
17,974
21,686
6,310
8,240
8,793
9,173
6,603
26,371
(4,555)
19,171
4,597
31,364
8,575
39,434
(182)
1
(13,835) (17,894)
(15,958) (17,894)
(18,328) (15,723)
(18,328) (15,723)
12,798 (5,215)
(8,085) (7,186)
(2,830) (12,402)
7,583 (11,124)
(16,000) (19,726)
(7,186) (7,186)
(23,187) (26,912)
(10,151) (3,202)
Others
Sale (Purchase) of PP&E
Net cash used in investing activies
Cash flows from financing activities
Increase (decrease) in long-term loans
Proceeds from share capital increase
Others
Dividend paid
Net cash provided by financing activities
Net increase (decrease) in cash
Statement of Financial Position
Ended Dec31
Cash and cash equivalents
Account receivables
Inventories
Other current assets
PP&E
Total assets
2014
32,204
910
22,167
9,402
80,201
326,410
Account payables
Other current liabilities
Total liabilities
Minority interest
Issued and paid-up share capital
Share premium
Retained earnings
Total shareholders' equity
59,312 57,148
32,703 28,559
291,352 285,959
4,276
4,522
8,983
8,983
1,684
1,684
21,432 27,606
35,058 41,478
63,685 71,590
29,355 27,032
278,584 269,041
4,820
5,181
8,983
8,983
1,684
1,684
38,198 55,109
52,368 69,640
326,410 327,437
330,952 338,681
10.9%
0.5% Total liabilities and shareholders' equity
0.4%
2017F
0.51
430.31
14.14
6.05
2.09
43.0%
7.1%
2014
2015F
2016F 2017F
21,080
10,929
7,727
999
1,133
1,276
23,916
27,206 30,683
9,911
10,461 11,055
88,808
97,276 102,738
327,437 330,952 338,681
Assumption
Ended Dec31
No of stores
Same Store Sales Growth (SSSG)
Total sales growth
2014
7,922
-2.6%
5%
2015F
8,472
5.0%
13%
2016F
9,022
5.0%
12%
2017F
9,572
5.0%
11%
MAKRO
Same Store Sales Growth (SSSG)
Total stores
4.3%
77
5.0%
86
5.0%
93
5.0%
98