Makro sets up trading company in Vietnam

In a filing to the Stock Exchange of Thailand on Monday, the company said Vina Siam Food (VSF) would provide trading and distribution as well as import/export business, under licences to be granted by the Department of Planning and Investment of Vietnam.
VSF is initially capitalised at Bt31.7 million.
The company is expected to reveal more information on the wholly owned subsidiary at an analyst meeting scheduled for November 22.
Asia Plus Securities has lowered its earnings projection for this year by 10 per cent and by 4 per cent for 2013 because of higher expenses from VSF outlet openings against stagnant sales growth.
Yet the revised earnings projection of Bt3.39 billion for this year still represent a year-on-year increase of 30 per cent, and next year’s forecast Bt4.14 billion a rise of 22 per cent.
Makro turned in a third-quarter net profit of Bt760 million, with no change in gross margin despite the opening of three outlets in the fourth quarter of 2011 and the third quarter of this year.
The new outlets also boosted sales and administrative expenses in the quarter, as did the higher minimum wage. This cost was offset by a cut in the corporate income-tax rate.
The company plans to add two more branches this quarter, with the one in Phetchabun already in operation and the other in Bang Phli ready for business today.
Asia Plus Securities notes that discount coupons, issued to draw customers, could also squeeze the company’s gross margin.