Robinson Department Store

Robinson Department Store Plc (ROBINS)

- 1Q14 profit to fall. Low same store sales for second quarter
We project ROBINS's 1Q14 net profit at B486m, falling 14% qoq and 12% yoy.
The political turmoil has been threatening purchasing power, probably lowering
1Q14 same store sales from -1.4%yoy to -4%yoy, especially in January and
February which should be a high season. Though PDRC stopped seizing
important areas in March, there was no significant recovery. Despite the opening
of five new branches in 2013, ROBINS's sales volume is expected to contract for
the first time in many years due to the closing of Ratchada branch in March
2013. Other income, namely rental income, is projected to grow by 20%yoy
thanks to an increase in rental spaces. Gross margin is expected leaping from
1Q13 by 230bps to 25% (there was sales promotion in 1Q13 after the opening
of Ratchada branch). However, SG&A/Sales is expected to hike by 400bps to
24.5%; opening of new branches would raise employee expense and
amortization cost (49% of ROBINS's SG&A), and some expenses on the opening
of the first branch in Vietnam would be booked.
- No signal for recovery. Likely to revise down earnings forecast
We project that ROBINS has passed its lowest already. Its earnings result is
expected to recover yoy throughout 2014 (effect from closed Ratchada branch is
not booked in 2Q13 earnings result). However, 2Q14 earnings result is likely to
suffer from the economic crunch. Also, CPN has been seizing ROBINS’s
customers from Chiang Mai branch and Hat Yai branch since late-2013, likely to
take at least three months to recover (projected to lower ROBINS's same store
sales by 1-2%). Equity profit from Power Buy is expected to increase, as sales
promotion for digital TV is scheduled to start in April. However, there has been
no conclusion about the sales promotion, and it might be delayed to June or
later. ROBINS's earnings forecast might be revised down; loss from the two first
branches in Vietnam is not included in our forecast yet, and the information is
still unclear. Management gives some guidance that the opening of the two new
branches is projected to raise ROBINS's SG&A/Sales from 23.4% 2013 (we
expect FY2014 SG&A/Sales to stay unchanged).
- Possibly at downtrend. Sell for short term
Share price has nearly reached FY2014 fair value (FV@B52). There is no
significant for recovery in near future. We reiterate to sell