CP All sets to gain hugely from acquisition
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CP All Plc is expected to show a 29 per cent increase in annualised net profit in 2014, thanks to its takeover of Siam Makro, according to Asia Plus Securities.
The house expects the deal to be completed in the third quarter and Siam Makro's earnings would be consolidated into CP All's balance sheets in the fourth quarter.
The takeover turns CP All into the third largest retailer in Asia, with combined revenue of Bt313 billion.
The house noted that CP All would gain from a higher bargaining power over suppliers and through regional expansion under "Makro" brand. At present, its license to operate 7-Eleven convenience stores is limited to some areas. Meanwhile, from 56 Makro outlets, 53 are owned by Siam Makro. These land plots, whose market value would be much higher than book value, could support the launch of property funds, it said.
Though the net gearing ratio will rise to 6 times, CP All's debt should fall to 1 time within 5 years thanks to higher cashflows.
Asia Plus expected CP All's sale and service revenue to rise from Bt188.7 billion last year to Bt251 million in 2013 and Bt385.6 billion in 2014. The net profits in the period will also rise from Bt11 billion in 2012 to Bt18 billion in 2014.
