Robinson Dept Store

Robinson Dept Store Plc (ROBINS)
 

Net profit undershot estimate, but core profit ahead: ROBINS reported a 4Q11 net profit of Bt306m, down by 24.8% YoY and 17.8% QoQ. The result was 22% below our estimate, as flooding damage at the warehouse of PowerBuy (ROBINS has a 40% stake) was booked as a 4Q11 expense. Damage totaled Bt274m, so Bt110m was booked against ROBINS’ equity income. Excluding such expenses, adjusted core profit would be Bt416m (up 2% YoY) for 4Q11 and Bt1.56bn (up 21.5%) for FY11, slightly higher than our model.
Results highlights: The top-line increased by 17.9% YoY to Bt5.1bn for 4Q11 and 19.2% to Bt17.6bn for FY11. SSSG was 6.5% in 4Q11 and 12% in FY11, slightly better than our expectation. Provincial stores remained the growth drivers with SSSG of 16% in FY11 versus only 6% for ROBINS’ Bangkok locations. GM maintained its uptrend with a 36 bps increase in 4Q11 to 24.7%, making for FY11 GM of 24.4% up 62 bps—substantially more than the firm’s target of 20 bps.
PowerBuy and SuperSports together contributed an equity loss of Bt31m in 4Q11, making for equity income for the year of Bt205m, down 18.9% YoY. But stripping out the expenses for warehouse damage, equity income would be Bt79m in 4Q11 and Bt315m in FY11, slightly above our model.
Outlook: We expect a strong profit rebound in 1Q12, due to the absence of damage expenses. Moreover, the insurance claims on 4Q11 damages should be settled in 1Q12 (2Q12 at the latest), which would top up the bottom-line for the quarter.
What’s changed? We maintain our earnings forecast and target price unchanged for the moment. The scope for further upgrades depends on the sustainability of the margin uptrend, which has exceeded our expectations for the last four quarters.
Recommendation: ROBINS should continue delivering earnings growth momentum for the next several years, driven by its aggressive expansion program and its seemingly unassailable market positioning in the provinces. We maintain our BUY rating with a YE12 target price of Bt50.50.