Robinson Department Store

Robinson Department Store Plc (ROBINS)

ROBINS’s CEO confirms expansion this year and next is on track. It plans to open
three new stores in October-November, increasing its store count to 30 by year-end
and plans to add another five stores in 2013; of these, it has already secured locations
for three. We are positive on its expansion plan as we believe there is ample room for
department stores upcountry, unlike hypermarkets, which are at risk of saturation.
With ROBINS’ expansion just started and store count to jump 1.6x to 39 in 2014F and
our view of a strong and sustainable SSS growth going forward, we expect benefits
from operating leverage to be immense. We expect ROBINS to post the sector’s
highest 2011-14F profit CAGR of 40%. Reiterate BUY with target price of Bt75/sh.

Key takeaways from Opportunity Day:

Expansion on track. After opening two new stores in 1H12, ROBINS will open three
new stores in 2H12: at Surat Thani and Bangkae in October and at Lampang in
November. ROBINS will end the year with a total of 30 department stores

Management confirmed that in 2013 it will open five more stores, with four being
in the “lifestyle center” format, which has more rental space, and one with the
Central Group. It plans to open one store in Kanchanaburi in 1Q13, one in Ubon
and one in Sakon Nakorn; the final two locations will be revealed later

In 2Q12 same-store sales (SSS) growth was 7.8% YoY with 1H12 at 8.3% YoY.
Upcountry SSS growth remains higher than in Bangkok where competition is
heightening.

For 3Q12, ROBINS CEO said spending sentiment in some provinces is not as strong
as in 2Q12 due to lower agricultural prices for some products, which has eroded
spending sentiment slightly, while in Bangkok competition seems to be heating
up. However he was positive that spending momentum will improve in 4Q12,
which is historically the year’s high quarter for department stores.

Other highlights included strong private brand sales, which grew 40% YoY in 2Q12
to where they accounted for 8% of total sales. Margin on these is much higher
than for name brands.

Last month, ROBINS reported 2Q12 profit growth of 22% YoY to Bt474mn; profit for
1H12 surged 34% YoY to Bt1.04bn. Net profit for 1H12 of Bt1.04 accounts for 46% of
our full year forecast, but second half is generally the stronger half, with the final
quarter the strongest, buoyed by the holiday season.