Big C Supercenter

Big C Supercenter Plc (BIGC)

Q1 2013’s profit might not outstanding. Only 9.6%yoy growth foreseen due to fierce competition
BIGC revealed 1Q13’s sales at B28.4bn, growing 7.2%yoy thanking to samestore-
sales growth of 2.4%yoy and a branch expansion of 4.8%yoy. In 1Q13,
the company opened 1 hypermarket (Roi-Ed), 1 BigC market (Cha-Am), 32
mini BigCs, and 4 Pure drugstores. At the same time, rental and other fee
incomes are projected to grow magnificently by 12%yoy following the rent
hike and the high occupancy rate. However, the profitability might not be
outstanding because of a fierce competition and a discount promotion,
especially the B80 discount coupon for every purchase of B800 that is almost
every weekend (8 times in 1Q13). Accordingly, gross margin and SG&A/sales
would remain stable from 1Q12. Nevertheless, with a benefit from the
corporate income tax cut, norm margin would be able to rise from 5.9% in
1Q12 to 6.8%, which would boost 1Q13’s profit by 9.7%yoy to B1,947m.
13%yoy growth targeted this year. Strong competition is key pressure
For the rest of the year, BIGC has planned to open 5 hypermarkets, 12 BigC
markets, 118 mini BigCs, and 46 Pure drugstores. Meanwhile, for the overall
earnings in 2013, only insignificant growth of 13%yoy is projected, which is
the least growth among peers, compared with the sector’s average of
25%yoy, due to a fierce competition in hypermarkets that has been
pressuring the company’s profitability. Although BIGC has tried to increase an
income from mini BIGCs, it comprises only a small portion and is insignificant.
In addition, the company will recognize lower flood damage claims this year
(comparing to B500m in 2012) because it has been able to resume normal
operations.
No positive sign. Hold to receive dividend of B2.2 or 1%.
Going XD today
Earnings performance is not remarkable this year, while there is not a sign of
forecast increase. We, therefore, reiterate our recommendation of hold
(FV@B215) to receive dividend of B2.2 or a dividend yield of 1%. The stock is
going XD today; the dividend payment date is 9 May 2013.