Robinson Department Store

Robinson Department Store Plc (ROBINS)

 

- 1Q15 profit much better than expected 

 

ROBINS's 1Q15 profit was B614m, growing 3%qoq and 14%yoy (better than expected for two consecutive weeks) thanks to high profitability. Normalized profit margin improved from 9.1% in 1Q14 to 10.2% in 1Q15, 140bp higher than initially projected because rental income and other income jumped by 44%yoy 22%yoy, respectively (better than expected), and SG&A was below our projection. Shared profit from both Supersport and Power Buy (19% of total profit) grew by 28%yoy. Same store sales fell by 6.6%yoy as a result of the weak economy; including sales from five new branches opened since 2014, total sales are stayed flat from 1Q14. 

 

- Profit to continue growing 

 

Sales are projected to remain low due to the weak economy, not likely to rebound until 2H15. However, net profit is expected to continue growing from the weak base in 2014 (depressed by the political and economic problems). Other figures have improved. Rental income (40-50% of total profit under EBITDA margin assumption of 50%) is projected to grow by at least 30% this year. Besides, three new Lifestyle Centers will be opened in 2H15 (one branch in Rayong will be opened in 1H15), possibly boosting profit to meet our target (down revision is not likely). Overall, FY2015 profit is estimated to grow by 17%yoy. 

 

- To outperform for short term like CPALL 

 

This is a good entry point for ROBINS, which has underperformed peers for a long time and the price has not reflected the rebound yet; FF2015 expected P/E ratio of 22.5x is lower than the seven-year average and the sector's average. ROBINS's net profit was higher than our projection and consensus in 1Q15, likely to rebound further, and its forecast is not likely to be revised down. ROBINS is likely to outperform peers for the short term like CPALL; we reiterate BUY.