Robinson Dept Store

Robinson Dept Store Plc (ROBINS)

In line with our estimate: ROBINS posted a 2Q12 net profit of Bt474m, up by 22% YoY but seasonally down 16% QoQ. The result was in line with our estimate, but 4% below the consensus. Reported sales, margin, SG&A expenses and equity income were exactly as expected.
Results highlights: The strong YoY growth was attributable to fast-rising sales, margin expansion, a lower corporate tax rate and substantial profit-sharing from Power Buy and Super Sports.
2Q12 sales increased by 22% YoY to Bt5.0bn, driven by 7.8% SSSG and the opening of five new stores since 2011. Provincial stores have continued to post double-digit sales growth.
Gross margin expanded by 36 bps YoY to 24.82% for 2Q12 and by 55 bps YoY to 24.81% for 1H12. The prevailing strong shopping sentiment allows the firm to offer less generous price discounts to attract customers.
SG&A expenses were well controlled. The higher payroll pushed up the SG&A/sales ratio only 47 bps YoY to 22.6%, in line with our expectation.
Power Buy and Super Sports together contributed equity income of Bt102m for 2Q12, up 21% YoY, thanks to an aggressive rollout and EURO 2012 soccer.
Outlook: 2H12 looks much better for softline retailers like ROBINS than 1H12. SSSG should be sustained at 8-9% in 2H12, while improving performances at new stores, particularly Rama IX, should substantially boost the bottom-line. Moreover, ROBINS is likely to be one of only a few retailers under our coverage to post QoQ profit growth in both 3Q12 and 4Q12. An insurance payout of around Bt100m for 4Q11 flood damages would mean upside to our model.
What’s changed? Our forecast and target price stand unchanged.
Recommendation: ROBINS fits our 2H12 discretionary theme perfectly and remains on our top BUY list in Thai Retail space. Our BUY rating stands with a YE12 target price of Bt69.