CP ALL

Q3 2012: Beats with record high SSS growth of 16%

CP ALL Plc (CPALL)

Core profit +35%YoY, +9% QoQ to Bt2.9bn. Profit came in 8% above consensus

(Bt2.65bn) and in line with SCBS. Profit for 9M12A rose 31% YoY to Bt8.2bn, 72% of our

full-year forecast. We expect to see earnings upgrades by the street: we are 9% ahead

of consensus for this year and 6percent for next. Revenue was +21% YoY to Bt21bn, on record

high SSS growth of 16.0% and new stores and gross margin rose 56bps YoY to 25.5%.

This was slightly below our assumption, but offset by sales promotion income from

suppliers who offered extra stamp promotional items at their own expense; this is in

"other income" which rose 59% YoY to Bt2.5bn.

Highlights:

Q3 2012 SSS growth +16.0%YoY from +10.5% in Q2 2012 and 8.8% in Q3 2011.

Management attributed the record high SSS growth to the success of its stamp

promotion that boosted both traffic and spending. Suppliers were back in full after

the floods, providing a large amount of products for this promotion at their own

expense.

Already 497 new stores in 9M12 vs. full-year target of 500. CPALL added 113

new stores in 3Q12, to bring the total to 6,773 nationwide. It said it will now

reallocate resources to renovations: it has already renovated ~400 stores with up

to 600 this year.

Q4 2012F: Profit to double YoY to a new high of Bt3.2bn. Unlike other retailers,

we do not see downside risk to our Bt3.2bn Q4 2012 implied profit. Faster-thanexpected

store rollout and stronger-than-expected SSS growth (estimated SSS

growth of 9M12 is 9% vs. our full-year forecast of 8.0%) will help offset our gross

margin assumption, which may be a little on the high side.

Remains our top pick for the sector, yearend 2013F target price of Bt46/sh.

We roll over our DCF-based target price from mid-2013 to year end-2013. YTD

CPALL stock price is up 56% vs. SETCOMM's 60% (MAKRO +81% and BJC +122%) and it

is likely to outperform, given greater growth in earnings than the market expects

in 2012-3.

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Article source: http://www.thethailandlinks.com/2012/11/08/cp-all-2/