CP All

CP All Plc (CPALL)

We expect revenue and margins to improve with superior product management and scale over
competitors. We expect store expansion and earnings to accelerate faster than market
expectations, resulting in higher market shares. In this transfer of coverage, we raise
our FY12-14 EPS estimates and DCF target price (10.4% WACC, 3.3% LTG),largely to factor in
faster-than-expected store rollout and margin expansion. Maintain Outperform with catalysts
expected from earnings improvements and market-share gains.

Store openings to accelerate with margin expansion Management recently announced a 10,000
7-11 store target by 2018. We assign a high probability of execution,and update our store-
opening forecast from 500 a year to 550 for FY12-18. We expect gross margins to improve with
an increasing percentage of higher-margin food items sold with SSSG for FY12-14
beating management guidance handsomely.

Competition not a near-term threat CPALL is the domestic convenience-store market leader.
With 6,660 convenience stores, it has over 7x the number of stores of its closest competitor,
Tesco Lotus.Other competitors have either been struggling recently, or have much slower
expansion plans. With CPALL’s intention to ramp up its store openings, we expect it to widen
its lead over competitors and gobble up more market share from both the aid of its largest
national footprint,price competiveness and dynamic product range.

Risk-reward attractive CPALL’s risk-reward trade-off justifies our Outperform rating. We
believe risks from competitors are limited. Maintain Outperform.