Robinson Department Store

Robinson Department Store Plc (ROBINS)

- 1Q14 profit fall yoy, but beyond expectation
1Q14 net profit was reported at B539m, falling 4%qoq and 2%yoy
(11% beyond expectation, 4% above consensus). Rental income
grew by 38%yoy to B416m, B50m higher than expected owing to
additional rental spaces from two new branches in Saraburi and
Surin in late-4Q13. Other factors were as expected: 1) 1Q14 sales
volume dropped by 5.8%yoy (1Q13 sales volume was boosted by
massive sales promotion before the closing of Ratchada branch).
Also, same store sales fell for the second quarter by 3.3%yoy. 2)
Gross margin rose by 140 bps (yoy) and returned to normal at
25.1%; effect from the closing of Ratchada branch was not booked
in 1Q14. 3) SG&A/Sales increased by 390 bps (yoy) to 24.4% as a
result of personnel and depreciation expenses (49% of SG&A). 4)
Share of profit from associates rose by B12m to B92m: B62m from
Super Sport (up 65%yoy) and B30m from Power Buy (down
28%yoy).
- Weak economy. Likely to revise down earnings forecast
Net profit is expected to recover yoy for the remainder of 2014
under the same profit base (no effect from Ratchada branch). In
order to reach FY2014 net profit growth target of 13.5%yoy, 2Q14-
4Q14 net profit is supposed to grow by 20%yoy. However, the
economy would stay weak in 2H14; 4Q14 would be the earliest
possible for the recovery (longer than expected). Also, loss from the
opening of two new branches in Vietnam (opened in April and 4Q14)
has not been included in our earnings forecast; the new branches
are expected to face loss in the first few years, starting from 2Q14.
Therefore, we might revise down ROBINS's FY2014 earnings
forecast further after the analyst meeting on May 14.
- Still at downtrend. Sell for short-term
The share price is less expensive than peers. FY2014 expected P/E
ratio of 24.6x is lower than the sector's average of 26.7x. However,
as FY2014 earnings forecast might be revised down in near future,
the price is unattractive and this is not a good entry point. We
reiterate to sell ROBINS(FV@B52).