Siam Makro
4Q13: In line, with resilient SSS growth BUY
Siam Makro Plc
Beating consumption slowdown with 4Q13 net profit of Bt1.3bn, +13% YoY and +28% QoQ, in line with SCBS and consensus. Store expansion and same-store sales (SSS) growth backed the YoY growth, with QoQ rising off high season. It will pay a 4Q13 DPS of Bt0.3, as we expected, based on an 89% dividend payout ratio, assuming shareholder approval on Apr 23 (adding to the Bt0.5 already paid on 9M13).
Highlights:
Sales & service revenue. Revenue was Bt35bn, +13.5% YoY and +13.8% QoQ, backed by continued SSS growth and store expansion.
SSS growth. We believe 4Q13 SSS growth was relatively stable from 9M13’s 7.6%.
New stores. In 4Q13, MAKRO opened two cash & carry stores and one small food service store, bringing total cash & carry outlets to 62, food service stores to two and Siam Frozen shops to five at end-2013.
EBITDA margin 5.6%, -0.4ppts YoY. The drop was pulled down by lower gross margin (-0.5bps YoY). SG&A/sales was stable YoY at 6.5%, with more stores, higher wages and higher electricity costs offset by control over other expenses.
Net margin flat YoY at 3.8%. This was mainly on lower effective tax rate (19% in 4Q13 vs. 23% in 4Q12) that more than made up for the lower operating margin.
BUY on resilient growth despite consumption slowdown. We maintain BUY with DCF PT at Bt35. We like MAKRO for its more resilient SSS growth than other retailers during a consumption slowdown and upcoming business synergies with CPALL from 2014F onwards. We note that CPALL has no intention of delisting MAKRO, but the small free float means the stock is most likely going to be very illiquid. More details will be provided after the analyst meeting on 28 Feb 2014.
