Robinson Department Store

Robinson Department Store Plc (ROBINS)  

 

- 2Q15 profit to grow 21%yoy   

2Q15 net profit is projected at B534m, jumping 21%yoy owing to the weak base in 2Q14 and its own good performance. Same store sales growth is projected to revive from -6.6%yoy in 1Q15 to -2%yoy in 2Q15. Although purchasing power has remained weak like in 1Q15, there have been aggressive sales promotions in many branches (including pre-renovation clearance sales in Sriracha branch), the new branch in Rayong has been well-received, ROBINS's business in Chiang Mai and Hat Yai has returned to normal after its customers were seized by CPN's branches in late 2013, and six new branches have been opened (five in 2014, one in 2Q15). Therefore, ROBINS's sales are projected to grow by 5.5%yoy. Rental income is also projected to grow by 44% to B630m, boosting ROBINS's profitability and compensating for increasing SG&A as a result of the opening of new branches. 

- Maintain forecast, FY2015 profit to grow 17%yoy 

If 2Q15 profit is in line with our projection, the full-year earnings are likely to meet our forecast. 2H15 earnings are expected to grow by 17%yoy, the same rate as 1H15. Expenses are projected to stay unchanged. Same store sales are likely to fall, but it would be compensated by higher profitability since rental income from five new Lifestyle Centers (more leasable space than usual) opened in 2014 will be booked for a full year and three new Lifestyle Centers (Buriram, Mae Sot, and Srisaman) will be opened in 2H15. In addition, six branches that are under renovation this year will be reopened late this year. 

- Limited downside 

The share price is currently within a lower frame of B42.75-50.00. FY2015 expected P/E ratio of 22.1x is lower than the seven-year average and the sector's average, which means a limited upside. We reiterate BUY.