Robinson Department Store

Robinson Department Store Plc  

 

Net income 9% above estimate

ROBINS reported 4Q15 earnings of Bt701m, up 18% YoY and 9% above our estimate due to stronger-than-expected equity income from Power Buy and Super Sport.

 

Results highlights

SSS returned to a growth of 3.1% in 4Q15 thanks to the windfall from the government stimulus package that allowed taxpayers to deduct up to Bt15,000 spent on goods and services purchased during 25-31 Dec from their taxable personal incomes. However, the good 4Q15 number was unable to push SSS for the year to growth territory. FY15 SSS still contracted 2.1%.

Gross margin was relatively flat YoY but improved 72bps QoQ thanks to high spending during the festive season. 

SG&A expenses increased 13% YoY to Bt2.04bn, pushing up SG&A expenses to sales ratio by 110bps to 28.1% due to higher depreciation and operating expenses of new stores.

Rental income growth has entered a decelerating trend (17.8% YoY in 4Q15 versus 47% in 3Q15).

Power Buy and Super Sports delivered strong performances in 4Q15, thanks to the windfall from the stimulus package. Profit sharing from Power Buy jumped 67% YoY to Bt66m, while that from Super Sports expanded 53% YoY to Bt86m.

ROBINS announced it will pay a dividend of Bt1/share, XD on 4 Mar.

Outlook

Management says that even without the government stimulus package, Jan SSS still grew by around 2-3%, which looks higher than the street expectation. If sales continue to gain at this momentum, there should be an upgrade flow. Note that we assume a FY16 SSSG of 1.8%.

What’s changed?

Our earnings forecast has remained unchanged.

Recommendation

ROBINS current valuation looks cheap, trading at a FY16 PER of only 18.3x (-0.8 below long-term average). Its performance should have already bottomed out and its growth profile should be improving. We maintain our BUY rating with YE16 target price of Bt48.