CP All is top buy on retail positives in Thailand: Maybank

CONVENIENCE store operator CP All was listed as a “top buy” in the Thai retail sector for 2023, as it benefits from increased consumption as the market leader in wholesale, retail and convenience store sales, said Maybank Securities in a report on Friday (Dec 16).

The brokerage was largely optimistic on the country’s retail sector in the coming year, based on the continued recovery in consumption driven by the national election due in May 2023 as well as rising mobility and increased tourist arrivals.

Analysts expect domestic consumption to grow in 2023 following the recovery in tourism, the national election as well as a government stimulus package. Purchasing power is likely to be lifted by lower inflation too, as analysts forecasted Thailand’s inflation to slip to 3 per cent in 2023 and 2 per cent in 2024.

Even while same-store sales growth in the retail sector is expected to slow down following a strong recovery in 2022 post-reopening, the brokerage continued to bank on a positive growth of 1 per cent and 5 per cent next year, with retail sector sales driven by new store openings and growing online sales.

Gross margins of most retail companies are also likely to increase in 2023 on growing sales, with a larger proportion of high-margin products and more contributions by house brand items, said Maybank, noting that declining raw material prices and economies of scale could enhance profitability.

CP All, which is the sole operator of 7-Eleven in Thailand, had a “buy” recommendation from the brokerage, with a target price of 79 baht. It was listed as the brokerage’s top pick for its market leading position, as increased mobility and influx of tourists are expected to boost convenience store customer traffic.

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Other retail names the brokerage were similarly bullish on include: Siam Makro, Home Product Center, Berli Jucker, and Siam Global House. All four were a “buy”, with targets of 44.80 baht, 16.80 baht, 42 baht, 26.35 baht respectively.