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12 May 2014
Page | 1 MCI (P) 046/11/2013 Ref. No.: TH2014_0185
Robinson Department Store - ROBINS
1QFY14 net profit down on economic headwinds
THAILAND | COMM | COMPANY RESULTS
BLOOMBERG ROBINS TB │ REUTERS ROBINS.BK
ROBINS reported a slight drop of 2.34% y-y and 3.97% q-q in 1QFY14 net profit to Bt538.92mn as it felt the pinch from economic slowdown.
The 1QFY14 results accounted for 23.97% of our full-year profit target of Bt2,248.70mn for ROBINS. Following a dismal showing in 1QFY14, we believe ROBINS should reap the benefit of additional sales from seven new stores to be opened later this year.
Sluggish economic conditions would remain a major drag on ROBINS’ bottom-line. With no upside left from current trading levels, we retain a ‘NEUTRAL’ stance on ROBINS shares with a FY14 DCF-based target price of Bt49.50/share.
ROBINS reported a slight drop of 2.34% y-y and 3.97% q-q in 1QFY14 net profit to Bt538.92mn as quarterly sales slipped 5.76% y-y and 9.53% q-q due chiefly to a slowdown in domestic consumption, the high base effect of 1QFY13’s sales boosted by closedown sale at its Ratchadapisek branch and sales cannibalization from new stores of its competitors in Chiang Mai and Hat Yai. Management has reiterated its FY14 sales growth guidance of 10% y-y chiefly boosted by the expansion of online distribution channel and its rollout plan for seven new store openings this year with a total capex budget of Bt5.55bn. Of the total, five stores will be in Thailand and the other two stores in Vietnam. How we view this We expect ROBINS’ FY14 net profit growth to decelerate to 13.25% y-y as subdued economic environment would put the brakes on sales growth while expenses tend to climb sharply higher on pre-operating expenses for new store openings, marketing expenses and depreciation charges. ROBINS plans to add seven new stores to its portfolio this year. Investment Action With no upside left from current trading levels, we retain a ‘NEUTRAL’ stance on ROBINS shares with a FY14 DCF-based target price of Bt49.50/share.
Key Financial Summary
FYE Dec FY10 FY11 FY12 FY13 FY14F FY15F
Revenue (Btmn) 14,794 1,453 21,620 24,300 27,570 32,888
NPAT (Btmn) 1,698 1,453 1,658 1,986 2,249 2,603
NPAT, adj. (Btmn) 1,698 1,453 1,645 1,986 2,249 2,603
EPS (Bt) 1.53 1.31 1.49 1.79 2.02 2.34
EPS, adj. (Bt) 1.53 1.31 1.49 1.79 2.02 2.34
P/E (X),adj. 32.7 38.2 33.5 28.0 24.7 21.3
BVPS (Bt) 7.26 8.17 9.77 10.82 12.00 13.39
P/B (X) 6.9 6.1 5.1 4.6 4.2 3.7
DPS (Bt) 0.62 0.65 0.90 0.86 0.97 1.12
Div. Yield (%) 1.2% 1.3% 1.8% 1.7% 1.9% 2.2%
Source: Bloomberg, PSR est.
**Multiples and yields are based on latest closing price
Analyst Phillip Research Team +65 65311240 [email protected]
12 May 2014
Page | 2 MCI (P) 046/11/2013 Ref. No.: TH2014_0185
Drop in cost of sales to sales ratio limits slide in 1QFY14 net profit ROBINS reported a slight drop of 2.34% y-y and 3.97% q-q in 1QFY14 net profit to Bt538.92mn as sales revenue slipped 5.76% y-y and 9.53% q-q to Bt5,941.25mn. SSSG shrank by 3.3%. The main culprits behind sales slide were (i) sluggish spending in the face of slowing economic conditions, (ii) the high base effect of 1QFY13’s sales boosted by closedown sale at its Ratchadapisek branch and (iii) sales cannibalization from new stores of its competitors in Chiang Mai and Hat Yai. However, costs of sales as a percentage of total revenue in this period fell dramatically on effective controls on price discounts. Gross profit margin accordingly expanded to 25.1% in this period from 23.7% in the year-earlier period. SG&A expenses also edged higher largely on account of higher depreciation charges and SG&A expenses for new stores opened in FY13. Profits from affiliates were up 15.35% y-y but down 18.82% q-q to Bt92.30mn. Growth at CRC Sport remained strong while Power Buy continued to be dogged by sluggish spending like Robinson Department Store. Despite faltering sales and a steady rise in expenses, a drop in cost of sales to sales ratio however helped limit the slide in 1QFY14 net profit. FY14 net profit outlook unchanged at Bt2,248.70mn The 1QFY14 results accounted for 23.97% of our full-year target for ROBINS. We leave our FY14 net profit outlook for ROBINS unchanged at Bt2,248.70mn. In our view, earnings growth is still possible for ROBINS despite a consumption slowdown as it should reap the benefit of additional sales from new stores to be opened later this year both at home and abroad, a factor that could push sales revenue and rental income up 13.46% and 19.33% y-y respectively. However, earnings growth this year may not be as strong as last year in the face of both political and economic headwinds. We estimate ROBINS will deliver FY14 earnings growth of 13.25% y-y to Bt2,248.70mn but the growth rate marks a deceleration from FY13 as a result of a sharp rise in operating expenses due to its rollout plan for seven new store openings. ‘NEUTRAL’ stance on ROBINS with Bt49.50/share target price The twin effects of prolonged political uncertainty with no signs of light at the end of the tunnel and economic sluggishness have now bitten into ROBINS earnings. With no upside left from current trading levels, we retain a ‘NEUTRAL’ stance on ROBINS shares with a FY14 DCF-based target price of Bt49.50/share.
Robinson Department Store - ROBINS 12 May 2014
Page | 3
ROBINS (Btmn) 1Q14 4Q13 1Q13 y-y+/- q-q+/-
Sales 5,941.25 6,566.96 6,304.62 -5.76% -9.53%
Costs of sales 4,447.17 4,927.00 4,811.58 -7.57% -9.74%
Gross profit 1,494.07 1,639.96 1,493.04 0.07% -8.90%
Rental& Service incom 416.91 358.59 301.93 38.08% 16.26%
Other income 185.32 255.66 172.31 7.55% -27.52%
SG&A 1,448.87 1,611.40 1,290.81 12.25% -10.09%
EBIT 647.43 642.81 676.47 -4.29% 0.72%
Associates & JVs 92.30 113.69 80.02 15.35% -18.82%
Interest expense 1.13 0.00 0.00 NA NA
EBT 738.60 756.50 756.48 -2.36% -2.37%
Taxation 130.16 127.00 134.35 -3.12% 2.49%
Profit After Tax 608.44 629.50 622.14 -2.20% -3.35%
Non-controlling Interest 69.52 68.29 70.25 -1.04% 1.80%
Net profit 538.92 561.21 551.89 -2.35% -3.97%
EPS (Bt) 0.49 0.51 0.50 -2.35% -3.97%
Cost of sales/sales 74.85% 75.03% 76.32% -1.92% -0.23%
SG&A exp/sales 24.39% 24.54% 20.47% 19.11% -0.62%
Gross margin 25.15% 24.97% 23.68% 6.19% 0.70%
Operating profit margin 10.90% 9.79% 10.73% 1.56% 11.33%
Net profit margin 9.07% 8.55% 8.75% 3.62% 6.14%
Balance sheet (Btm)
Assets 18,820.01 18,830.19 17,564.85 7.15% -0.05%
Liabilities 6,204.79 6,817.65 6,082.12 2.02% -8.99%
Paid-up (m shrs) - Par Bt1 1,110.66 1,110.66 1,110.66 0.00% 0.00%
Equities 12,615.22 12,012.54 11,482.73 9.86% 5.02%
Book value/share(Bt) 11.36 10.82 10.34 9.86% 5.02%
Debt/equity (x) 0.49 0.57 0.53 -7.14% -13.34%
Robinson Department Store - ROBINS 12 May 2014
Page | 4
FYE Dec FY09 FY10 FY11 FY12 FY13 FY14F FY15F FYE Dec FY09 FY10 FY11 FY12 FY13 FY14F FY15F
Revenue 12,842 14,794 17,630 21,620 24,300 27,570 32,888 Cash 3,513 2,384 3,023 1,882 1,371 1,928
EBITDA 1,798 2,585 2,782 3,477 3,742 4,595 5,702 Investments 0 622 1,040 219 800 800
Depreciation & Amortisation 718 785 1,058 1,418 1,848 2,445 Accounts Receivables 636 759 847 865 1,022 1,171
EBIT 1,156 1,867 1,997 2,420 2,324 2,747 3,257 Inventories 941 1,163 1,325 1,667 1,642 1,909
Net Finance (Expense)/Inc 0 0 0 0 0 0 Others 174 175 176 177 178 179
Other i tems 0 0 0 0 0 0 Total current assets 5,264 5,104 6,411 4,810 5,012 5,986
Associates & JVs 253 205 402 358 376 358 PPE 1,887 3,224 4,965 6,752 9,430 11,711
Exceptional i tems 0 0 0 0 0 0 Intangibles 2,604 3,105 3,034 2,812 2,945 2,945
Profit Before Tax 2,120 2,202 2,822 2,682 3,123 3,616 Associates & JVs 1,415 1,620 677 1,102 1,000 1,000
Taxation 343 568 930 456 625 723 Investments 29 29 158 196 190 210
Profit After Tax 1,777 1,634 1,892 2,226 2,499 2,893 Others 1,040 1,183 1,914 3,157 2,253 1,657
Non-control l ing Interest 79 181 234 241 250 290 Total non-current assets 6,975 9,161 10,749 14,020 15,818 17,523
Net Income, reported 1,698 1,453 1,658 1,986 2,249 2,603 Total Assets 10,608 12,238 14,265 17,160 18,830 20,830 23,510
Net Income, adj. 1,013 1,698 1,453 1,645 1,986 2,249 2,603 Short term loans 0 0 0 0 0 0
Accounts Payables 3,858 4,794 5,947 6,484 7,164 8,253
Others 188 271 201 145 100 110
FYE Dec FY09 FY10 FY11 FY12 FY13 FY14F FY15F Total current liabilities 4,046 5,064 6,147 6,629 7,264 8,363
Long term loans 0 0 0 0 0 0
EPS, reported 1.53 1.31 1.49 1.79 2.02 2.34 Others 129 131 157 188 243 281
EPS, adj. 1.53 1.31 1.49 1.79 2.02 2.34 Total non-current liabilities 129 131 157 188 243 281
DPS 0.62 0.65 0.90 0.86 0.97 1.12 Non-control l ing interest 188 331 520 670 820 970
BVPS 7.26 8.17 9.77 10.82 12.00 13.39 Shareholder Equity 6,797 8,064 9,070 10,856 12,013 13,323 14,866
FYE Dec FY09 FY10 FY11 FY12 FY13 FY14F FY15F FYE Dec FY09 FY10 FY11 FY12 FY13 FY14F FY15F
CFO P/E (X), adj.** 32.7 38.2 33.5 28.0 24.7 21.3
PBT 2,129 2,202 2,815 2,682 3,123 3,616 P/B (X), adj.** 6.9 6.1 5.1 4.6 4.2 3.7
Adjustments (1) 544 467 1,011 1,483 2,076 EV/EBITDA (X), adj. #NAME? 16.1 20.4 13.7 11.8 9.4
WC changes (26) 260 484 (4) 691 711 Dividend Yield (%) 1.2% 1.3% 1.8% 1.7% 1.9% 2.2%
Cash generated from ops 2,102 3,006 3,765 3,690 5,298 6,404 Growth & Margins (%)
Others 279 486 586 500 1,324 1,601 Growth
Cashflow from ops 1,823 2,520 3,179 3,190 3,973 4,803 Revenue 15.2% 19.2% 22.6% 12.4% 13.5% 19.3%
CFI EBITDA 43.8% 7.6% 25.0% 7.6% 22.8% 24.1%
CAPEX, net (402) (2,411) (3,051) (3,275) (4,871) (4,490) EBIT 61.5% 7.0% 21.2% -4.0% 18.2% 18.6%
Others 409 (625) 1,288 35 1,426 1,421 Net Income, adj. 67.6% -14.4% 13.2% 20.7% 13.3% 15.7%
Cashflow from investments 7 (3,036) (1,762) (3,241) (3,445) (3,069) Margins
CFF EBITDA margin 17.5% 15.8% 16.1% 15.4% 16.7% 17.3%
Share i ssuance 0 0 0 0 0 0 EBIT margin 12.6% 11.3% 11.2% 9.6% 10.0% 9.9%
Loans , net of repayments 0 0 0 0 0 0 Net Profi t Margin 12.0% 9.3% 8.8% 9.2% 9.1% 8.8%
Dividends (487) (725) (778) (1,090) (1,039) (1,177) Key Ratios
Others 53 112 0 0 0 0 ROE (%) 22.9% 17.0% 16.6% 17.4% 17.8% 18.5%
Cashflow from financing (434) (613) (778) (1,090) (1,039) (1,177) ROA (%) 14.9% 11.0% 10.6% 11.0% 11.3% 11.7%
Net change in cash 1,396 (1,129) 639 (1,141) (511) 557
Effects of exchange rates 0 0 0 0 0 0 Net Debt/(Cash) (3,513) (2,384) (3,023) (1,882) (1,371) (1,928)
CCE, end 3,513 2,384 3,023 1,882 1,371 1,928 Net Gearing (X) 0.05 0.20 0.19 0.26 0.29 0.29
**Based on latest closing price
Source: Company Data, PSR est
Balance Sheet (Btmn)
Per share data (Bt)
Cashflow Statements (Btmn) Valuation Ratios
Income Statement (Btmn)
Robinson Department Store - ROBINS 12 May 2014
Page | 5
Total Returns Recommendation Rating> +20% Buy 1+5% to +20% Accumulate 2-5% to +5% Neutra l 3-5% to -20% Reduce 4<-20% Sel l 5
We do not base our recommendations entirely on the above quanti tative return
bands . We cons ider qual i tative factors l ike (but not l imited to) a s tock's ri sk
reward profi le, market sentiment, recent rate of share price appreciation,
presence or absence of s tock price catalysts , and speculative undertones
surrounding the s tock, before making our fina l recommendation
Ratings History
PSR Rating System
Remarks
12345
Source: Bloomberg, PSR
0.00
40.00
80.00
120.00
De
c-12
Ma
r-13
Jun
-13
Se
p-1
3
De
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Ma
r-14
Jun
-14
Se
p-1
4
De
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Market Price
Target Price
Robinson Department Store - ROBINS 12 May 2014
Page | 6
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Total ReturnTotal ReturnTotal ReturnTotal Return RecommendationRecommendationRecommendationRecommendation RatingRatingRatingRating RemarksRemarksRemarksRemarks >+20%>+20%>+20%>+20% BuyBuyBuyBuy 1111 >20% upside from the current price>20% upside from the current price>20% upside from the current price>20% upside from the current price
+5% to +20%+5% to +20%+5% to +20%+5% to +20% AccumulateAccumulateAccumulateAccumulate 2222 +5% to +20%upside from the curren+5% to +20%upside from the curren+5% to +20%upside from the curren+5% to +20%upside from the current pricet pricet pricet price ----5% to +5%5% to +5%5% to +5%5% to +5% NeutralNeutralNeutralNeutral 3333 Trade within ± 5% from the current priceTrade within ± 5% from the current priceTrade within ± 5% from the current priceTrade within ± 5% from the current price ----5% to 5% to 5% to 5% to ----20%20%20%20% ReduceReduceReduceReduce 4444 ----5% to 5% to 5% to 5% to ----20% downside from the current price20% downside from the current price20% downside from the current price20% downside from the current price
<<<<----20%20%20%20% SellSellSellSell 5555 >20%downside from the current price>20%downside from the current price>20%downside from the current price>20%downside from the current price
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