An opportunity to buy CPALL shares with the expectation of continued strong returns – Thunhoon

#Thun Hoon – Despite concerns about the potential negative impact of the new government’s policies. But Bualuang Securities We still view the recent drop in CPALL’s share price as a “buying” opportunity given its expectation of multi-year double-digit earnings growth.

For the medium to long term forecasts In addition to recovering consumption, inflation and an unlikely increase in the rate (MAKRO’s) will support the business in the second half of 2023, we believe that CPALL’s ability to adapt to meet the changing demands of consumers. This is another factor driving earnings growth after COVID-19. We expect the average net profit growth in 2023-2025 to be 24%. CPALL’s operating profit alone will increase. driven by increased sales and profit margins

At the same time, it also benefits from a product strategy. Delivery service and conversion of 7-Eleven stores into independent stores. This will help facilitate spending in stores. In addition, sales from delivery services Currently account for 10% of total sales. and independent stores accounted for 50% of 7-Eleven stores 7-Eleven Increasing over the last 5 years

At the end of April In the past, the Bualuang Securities research team had the opportunity to visit CPALL’s 7-Eleven operations in Phnom Penh, Cambodia, where CPALL has received a master franchise license As for Cambodia in 2020, there are currently 56 of stores in the country (23 in Phnom Penh), of which 53 are franchised. A 7-Eleven store in Cambodia looks and feels very similar to the store in Thailand. But with 700 customers a day, which is lower than in Thailand, 7-Eleven should continue to see growth due to an increase in the number of customers along with urbanization and more revenue. CPALL aims to expand its presence in Cambodia. to 200 locations within the next few years. It is expected that the operation will break even.

about the impact and concerns of the market on the new government’s policies Let’s calculate the probability of the potential impact of each policy on CPALL’s profit in 2024 from different policies. The proposed minimum wage and corporate income tax may hinder CPALL, but on the other hand, lower electricity prices and higher consumer spending will boost CPALL if both possibilities are considered. We note that the share price CPALL already reflects the worst-case scenario.

In terms of risks and rewards Still attractive We still like CPALL for its adaptability and growth potential. Although the stock trades at a 2023 PER of 33.3x, the CAGR of net profit in 2023-2025 is over 20%, resulting in a 2024 PER of 26.3 and a 2025 PER of 21.7x, which is below average historical on. 31.2 times as much

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