1. business and industrial

COMPANY UPDATE
Robinson Department
Store
12 January 2015
ROBINS TB / ROBINS.BK
Another step into Vietnam
Sector: Consumer/Retail Neutral
Rating: BUY
Target Price: Bt55.00
Price (9 January 2015): Bt46.50
Price chart
What’s new?
Power Buy, in which ROBINS holds 40%, has acquired a 49% stake in
NKT New Solution and Technology Development Investment Joint Stock
Company (NKT). NKT holds 100% of Nguyen Kim Trading Joint Stock
Company (NK Trading), which operates an electronics store chain in
Vietnam. NK Trading was established in 2001 and currently has 21 stores
across the country.
For the financial year ending March 2014, NK Trading reported sales of
8,438bn Vietnamese Dong (about Bt13bn) and a net profit of 352bn Dong
(Bt540m).
Minimal impact on earnings in the short-term
ROBINS has yet to disclose the acquisition value and how Power Buy will
finance the acquisition. Its filing to the SET simply states that it has issued
a corporate guarantee for 40% of the total loan amount of Bt3,795m to
Power Buy (pro rata by percentage holding in Power Buy). Assuming that
new loans are used to finance the acquisition and a financing cost range
of 4-5%, the equity income that Power Buy receives from NKT during the
first year would be roughly squared by the interest expenses. Note that
we have yet to factor the acquisition into our model, as the deal size,
financing plan and NKT’s growth prospects are still matters of conjecture.
Upgrade to BUY
Although ROBINS’ near-term performance will remain weak, its recent
share price fall prompted us to upgrade our rating to BUY, as the current
price is far below the firm’s fundamental value. The stock currently trades
on an FY15 PER of 24.1x, its lowest level in three years. In our view, now
is a good time for long-term investors to start accumulating ROBINS at
this bargain price. But for short-term investors we recommend waiting
until 2Q15, just before the recovery builds steam.
Price
Bt
70
Rel. to SET
Rel. Idx
150
50
100
30
50
10
01/14
0
03/14
05/14
Share price perf. (%)
Relative to SET
Absolute
07/14
1M
(3.2)
(5.1)
09/14
10/14
3M
(9.8)
(11.8)
12M
(24.7)
(3.1)
Key statistics
Market cap
12-mth price range
12-mth avg daily volume
# of shares (m)
Est. free float (%)
Foreign limit (%)
Consensus
rating
%
100
80
60
40
20
0
Buy
57
36
7
1
Hold
Sell
Bt51.6bn
Bt40.8/Bt61.5
Bt69m
1,111
38.8
49.0
USD1.6bn
USD2.1m
BLS Target price BLS earnings
vs. Consensus vs. Consensus
Bt
60.0
Btm
3000
58.0
2000
56.0
BLS
1000
54.0
52.0 BLS Cons.
BLS Cons.
0
14E 15E
Financial summary
FY Ended 31 Dec
Revenues (Btm)
Net profit (Btm)
EPS (Bt)
EPS growth (%)
Core profit (Btm)
Core EPS (Bt)
Core EPS growth (%)
PER (x)
PBV (x)
Dividend (Bt)
Dividend yield (%)
ROE (%)
2013
24,300
1,986
1.79
+19.8%
1,951
1.76
+1.8%
35.3
5.8
0.9
1.4
18.3
2014E 2015E 2016E
24,116 27,432 31,319
1,847
2,139
2,730
1.66
1.93
2.46
-7.0% +15.8% +27.6%
1,847
2,139
2,730
1.66
1.93
2.46
-5.3% +15.8% +27.6%
28.0
24.1
18.9
4.0
3.6
3.2
0.8
1.0
1.2
1.8
2.1
2.6
15.7
16.7
19.2
CG rating
Chaiyatorn Sricharoen, CFA
Securities Fundamental Investment Analyst
[email protected]
+66 2 618 1344
See disclaimer at the end of report
Cons.
ROBINS : Financial Tables – Year
PROFIT & LOSS (Btm)
Revenue
Cost of sales and services
Gross profit
SG&A
EBIT
Finance costs
Other income/exp.
EBT
Corporate tax
After-tax net profit (loss)
Minority interest
Equity earnings from affiliates
Extra items
Net profit (loss)
Reported EPS
Fully diluted EPS
Core net profit
Core EPS
EBITDA
KEY RATIOS
Revenue growth (%)
Gross margin (%)
EBITDA margin (%)
Operating margin (%)
Net margin (%)
Core profit margin (%)
ROA (%)
ROCE (%)
Asset turnover (x)
Current ratio (x)
Gearing ratio (x)
Interest coverage (x)
BALANCE SHEET (Btm)
Cash & Equivalent
Accounts receivable
Inventory
PP&E-net
Other assets
Total assets
Accounts payable
ST debts & current portion
Long-term debt
Other liabilities
Total liabilities
Paid-up capital
Share premium
Retained earnings
Shareholders equity
Minority interests
Total Liab.&Shareholders' equity
CASH FLOW (Btm)
Net income
Depreciation and amortization
Change in working capital
FX, non-cash adjustment & others
Cash flows from operating activities
Capex (Invest)/Divest
Others
Cash flows from investing activities
Debt financing (repayment)
Equity financing
Dividend payment
Others
Cash flows from financing activities
Net change in cash
Free cash flow (Btm)
FCF per share (Bt)
Key Assumptions
Same-store-sales growth
Store number
Sales space growth
Rental space growth
Gross margin change (bps)
2012
2013
2014E
2015E
2016E
21,620
24,300
24,116
27,432
31,319
(16,310) (18,386) (18,219) (20,717) (23,589)
5,309
5,914
5,897
6,716
7,730
(4,782) (5,686) (6,398) (7,715) (8,838)
2,301
2,289
2,106
2,484
3,195
0
0
(39)
(74)
(88)
1,773
2,061
2,607
3,483
4,303
2,301
2,289
2,068
2,410
3,107
(552)
(456)
(430)
(499)
(642)
1,749
1,833
1,638
1,911
2,465
(234)
(241)
(217)
(238)
(262)
402
358
426
466
527
(259)
35
0
0
0
1,658
1,986
1,847
2,139
2,730
1.49
1.79
1.66
1.93
2.46
1.49
1.79
1.66
1.93
2.46
1,917
1,951
1,847
2,139
2,730
1.73
1.76
1.66
1.93
2.46
3,358
3,707
3,821
4,787
5,886
22.6
24.6
15.5
10.6
7.7
8.9
10.6
16.6
1.4
1.0
0.0
n.m
12.4
24.3
15.3
9.4
8.2
8.0
11.0
17.4
1.4
0.7
0.0
n.m
(0.8)
24.5
15.8
8.7
7.7
7.7
9.0
13.5
1.2
0.4
0.2
122.3
13.7
24.5
17.5
9.1
7.8
7.8
8.9
12.8
1.1
0.4
0.2
80.9
14.2
24.7
18.8
10.2
8.7
8.7
10.1
14.5
1.2
0.3
0.2
85.5
4,063
604
1,325
7,954
3,214
17,160
4,347
0
0
1,957
6,304
3,943
0
6,266
10,336
520
17,160
2,100
739
1,667
9,519
4,805
18,830
4,407
0
0
2,410
6,818
3,943
0
7,252
11,343
670
18,830
1,032
649
1,369
14,172
5,004
22,226
4,269
2,400
0
2,528
9,197
3,943
0
8,117
12,208
821
22,226
1,084
918
2,027
16,582
5,362
25,972
5,148
3,600
0
2,812
11,560
3,943
0
9,333
13,424
988
25,972
1,097
859
1,778
18,611
5,772
28,116
5,336
3,400
0
3,124
11,860
3,943
0
10,993
15,084
1,172
28,115
1,658
1,058
546
(83)
3,179
(2,789)
1,027
(1,762)
0
0
(778)
1,027
(778)
639
390
0.4
1,986
1,418
(417)
203
3,190
(4,067)
827
(3,241)
0
0
(1,090)
827
(1,090)
(1,141)
(877)
(0.8)
1,847
1,715
249
(209)
3,602
(6,268)
398
(5,870)
2,400
0
(982)
398
1,418
(850)
(2,666)
(2.4)
2,139
2,303
(48)
(228)
4,166
(4,604)
213
(4,391)
1,200
0
(924)
213
276
52
(437)
(0.4)
2,730
2,691
497
(265)
5,653
(4,604)
233
(4,370)
(200)
0
(1,070)
233
(1,270)
13
1,049
0.9
10.3%
30
21.8%
n.a.
+15
3.1%
34
7.2%
32.6%
-22
-5.0%
41
14.8%
35.5%
+12
2.8%
46
9.3%
18.9%
+3
5.0%
51
7.9%
19.9%
+20
Revenue growth and asset turnover
Revenue growth (%) (LHS)
Asset turnover (x) (RHS)
%
25
20
15
10
5
0
(5)
x
1.5
1.0
0.5
0.0
10
11
12
14E 15E 16E
13
A/C receivable & A/C payable days
AR / Sales (days)
AP / Cost of Goods (days)
days
120
100
80
60
40
20
0
10
11
12
13
14E
15E
16E
15E
16E
Profit margins
Gross margin (%)
EBIT margin (%)
%
30
25
20
15
10
5
0
10
11
12
13
14E
Capital expenditure
Capex (Bt,bn)
Capex / Net PPE (%)
Bt,bn
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
%
50
40
30
20
10
0
10
11
12
13
14E 15E 16E
ROCE
ROCE (%)
25
20
15
10
5
0
10
11
12
13
14E
15E
16E
Dividend payout
Dividend (Bt)
Payout ratio (%)
Bt/Shr
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
%
1.23
0.62 0.65
10
11
0.90 0.90 0.83 0.96
12
13
70
60
50
40
30
20
10
0
14E 15E 16E
ROBINS - 2
ROBINS : Financial Tables – Quarter
QUARTERLY PROFIT & LOSS (Btm)
Revenue
Cost of sales and services
Gross profit
SG&A
EBIT
Finance costs
Other income/exp.
EBT
Corporate tax
After-tax net profit (loss)
Minority interest
Equity earnings from affiliates
Extra items
Net profit (loss)
Reported EPS
Fully diluted EPS
Core net profit
Core EPS
EBITDA
KEY RATIOS
Gross margin (%)
EBITDA margin (%)
Operating margin (%)
Net margin (%)
Core profit margin (%)
BV (Bt)
ROE (%)
ROA (%)
Current ratio (x)
Gearing ratio (x)
Interest coverage (x)
3Q13
5,869
(4,474)
1,395
(1,433)
(38)
0
516
478
(93)
386
(51)
90
0
425
0.38
0.38
425
0.38
849
4Q13
6,567
(4,927)
1,640
(1,611)
29
0
580
608
(126)
482
(68)
114
35
562
0.51
0.51
527
0.47
1,023
1Q14
5,941
(4,447)
1,494
(1,449)
45
(1)
602
646
(130)
516
(70)
92
0
539
0.49
0.49
539
0.49
1,054
2Q14
5,500
(4,154)
1,346
(1,492)
(146)
(9)
620
464
(99)
365
(46)
121
0
440
0.40
0.40
440
0.40
871
3Q14
5,774
(4,420)
1,355
(1,581)
(227)
(14)
624
384
(79)
305
(47)
95
0
353
0.32
0.32
353
0.32
810
Revenue trend
Revenue (Bt,bn) (LHS)
Revenue growth (% YoY)
Bt,bn
7
7
6
6
5
5
1Q13
3Q13
Key Statistics
Same-store-sales growth
Store number
Sales space growth (YoY)
Rental space growth (YoY)
1Q14
3Q14
Revenue trend (accumulated)
Accum. Revenue (Bt,bn)
% of FY Revenue
Bt,bn
30
%
120
100
25
73
20
10
100
71
49
15
80
47
26
60
25
40
5
20
0
0
23.8
14.5
8.1
7.2
7.2
10.2
16.1
10.2
0.7
0.0
n.m.
25.0
15.6
9.3
8.6
8.0
10.8
20.3
12.6
0.7
0.0
n.m.
25.1
17.7
10.9
9.1
9.1
11.4
18.6
11.5
0.6
0.0
n.m.
24.5
15.8
8.6
8.0
8.0
10.8
15.2
9.2
0.5
0.2
n.m.
23.5
14.0
6.9
6.1
6.1
11.2
12.3
7.1
0.4
0.2
n.m.
1Q13
1,346
440
1,504
9,309
4,136
16,736
3,517
0
0
1,838
5,355
3,943
0
6,690
10,779
601
16,736
2,100
739
1,667
9,519
4,805
18,830
4,407
0
0
2,410
6,818
3,943
0
7,252
11,343
670
18,830
1,276
567
1,611
10,315
5,052
18,820
3,525
600
0
2,080
6,205
3,943
0
7,791
11,876
739
18,820
1,102
445
1,530
11,207
5,117
19,401
3,234
2,120
0
2,063
7,416
3,943
0
7,232
11,317
667
19,401
1,096
513
1,444
11,913
5,617
20,582
3,415
2,325
0
2,458
8,197
3,943
0
7,584
11,670
714
20,582
3Q13
1Q14
3Q14
Net profit trend (accumulated)
Accum. Profit (Bt,m)
% of FY Profit
Bt,m
2,500
120
100
72
72
1,500
1,000
%
100
2,000
80
53
50
60
29
28
40
500
20
0
0
1Q13
QUARTERLY BALANCE SHEET (Btm)
Cash & Equivalent
Accounts receivable
Inventory
PP&E-net
Other assets
Total assets
Accounts payable
ST debts & current portion
Long-term debt
Other liabilities
Total liabilities
Paid-up capital
Share premium
Retained earnings
Shareholders equity
Minority interests
Total Liab.&Shareholders' equity
%
30
25
20
15
10
5
0
(5)
(10)
3Q13
1Q14
3Q14
Gross profit margin
FY GPM (%)
Gross margin (%)
%
25.5
25.0
24.5
24.0
23.5
23.0
22.5
1Q13
3Q13
1Q14
3Q14
EBIT margin
FY EBIT margin (%)
EBIT margin (%)
%
12
10
8
6
5.0%
32
17.4%
32.6%
-1.4%
34
7.2%
38.5%
-3.3%
34
10.7%
17.6%
-7.0%
35
8.4%
25.6%
-6.8%
36
10.3%
35.5%
4
2
0
1Q13
3Q13
1Q14
3Q14
Company profile
Robinson Department Store (ROBINS) is Thailand’s largest department store chain and a member of Central Group, Thailand's largest retail firm. The firm
currently has 35 stores; 10 in greater Bangkok, 24 in the provinces and one in Vietnam.
ROBINS - 3
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Simple average
P ER (x)
P rice M arket Cap
002024 CH
1025 HK
3368 HK
9843 JT
2651JT
3382 JT
8028 JP
2912 TT
CAPL SP
SMPH PM
HD US
COST US
CA FP
HMPRO TB
BIGC TB
BEAUTY TB
KAMART TB
BJC TB
CPALL TB
CPN TB
DSGT TB
GLOBAL TB
ROBINS TB
SF TB
OFM TB
MAKRO TB
CNY9.4
HKD6.3
HKD2.0
JPY6,550.0
JPY7,510.0
JPY4,366.5
JPY4,650.0
TWD239.0
SGD3.2
PHP17.4
USD104.9
USD143.3
EUR23.9
THB8.20
THB242.00
THB33.50
THB6.25
THB41.25
THB42.25
THB45.50
THB7.70
THB10.80
THB46.50
THB6.30
THB50.50
THB37.00
2014E
11,142
1,041
710
6,322
6,353
32,644
3,831
7,784
10,314
11,180
138,227
63,133
20,757
3,078
6,078
306
125
1,999
11,554
6,216
295
1,002
1,572
284
492
5,407
n.a.
14.9
12.3
17.3
18.7
20.7
17.8
26.0
20.3
25.1
23.3
27.7
15.6
32.0
26.8
33.1
25.3
40.3
36.9
28.1
20.7
47.7
28.0
13.8
32.5
38.1
25.7
PER band versus SD (next 12 months)
EP S Growth (%)
2015E
n.a.
13.6
11.8
15.8
17.0
18.7
20.6
24.6
18.7
22.1
20.1
25.3
13.6
27.9
23.6
26.1
23.9
30.3
27.9
24.7
18.9
39.5
24.1
10.4
28.4
32.3
22.4
2014E
-398.0
n.a.
n.a.
8.4
5.5
6.2
9.8
19.8
-1.5
16.4
20.1
10.6
-9.1
3.1
7.0
43.6
1.3
-31.5
-2.5
17.3
-31.4
-22.1
-7.0
17.7
21.6
8.4
-11.9
2015E
-51.0
8.9
3.9
9.6
9.7
10.7
-12.7
4.7
12.2
12.2
14.6
9.8
6.4
14.9
13.2
26.7
5.6
32.7
32.2
13.7
10.0
21.0
15.8
32.4
14.4
18.1
11.1
P BV (x)
2014E
2.6
1.6
0.7
2.2
2.6
1.7
1.6
8.3
0.8
2.4
15.9
4.2
1.8
6.5
4.7
9.0
5.8
3.6
10.8
4.9
3.4
2.3
4.0
1.3
3.3
14.7
4.6
ROE (%)
2015E
2.6
1.5
0.7
2.0
2.4
1.6
1.5
7.5
0.8
2.2
16.9
3.7
1.6
5.7
4.1
8.2
5.9
3.3
9.3
4.3
3.1
2.2
3.6
1.2
3.1
13.9
4.3
Div Yield (%)
2014E
2015E
-2.2
11.4
6.4
15.2
16.3
9.2
8.0
34.8
5.4
11.3
93.9
17.4
13.3
22.4
18.8
28.7
24.6
11.0
34.4
18.9
18.2
5.6
15.7
10.6
10.5
40.3
19.2
-3.6
11.3
6.3
15.7
15.4
8.7
9.4
36.4
5.0
10.9
54.4
17.6
12.8
21.8
18.6
32.9
24.9
13.7
40.3
18.9
17.3
5.7
16.7
12.6
11.3
44.3
18.4
2014E
2015E
0.5
3.8
3.7
0.8
3.2
1.7
2.3
2.9
2.4
1.3
1.8
1.0
2.9
1.4
1.1
2.7
4.2
1.4
2.1
1.4
2.5
0.6
1.8
0.2
1.2
2.3
2.0
0.5
4.1
3.8
0.9
3.4
1.8
2.3
3.2
2.5
1.5
2.1
1.1
3.2
1.7
1.3
3.4
4.5
1.8
2.4
1.6
2.7
0.8
2.1
0.2
1.4
2.8
2.2
PBV band versus SD (next 12 months)
x
x
60
9.0
+3 SD = 52.6x
50
+2 SD = 41.9x
+3 SD = 8.4x
8.0
+2 SD = 6.7x
7.0
6.0
40
+1 SD = 31.2x
30
LT-average = 20.6x
20
-1 SD = 9.9x
10
+1 SD = 5.0x
5.0
4.0
LT-average = 3.3x
3.0
2.0
-1SD = 1.5x
1.0
0
YE06
YE07
YE08
YE09
YE10
YE11
YE12
YE13
0.0
YE06
YE14
PER band and share price
YE07
YE08
YE09
YE10
YE11
YE12
YE13
YE14
PBV band and share price
Bt/share
52.6x
100
90
80
70
60
50
41.9x
100
31.2x
80
20.6x
40
Bt/share
120
8.4x
6.7x
5.0x
60
3.3x
40
30
9.9x
20
10
0
YE06
YE07
YE08
YE09
YE10
YE11
YE12
YE13
0
YE06
YE14
1.5x
20
YE07
YE08
YE09
YE10
YE11
YE12
YE13
YE14
Foreign holding
%
ROBINS
27
26
25
24
23
22
Commerce
23.7
8/14
9/14
10/14
11/14
12/14
1/15
ROBINS - 4
DISCLAIMER
Bualuang Securities Public Company Limited
BUALUANG SECURITIES PUBLIC COMPANY LIMITED (BLS) is a subsidiary of BANGKOK BANK PUBLIC COMPANY LIMITED (BBL). This document
is produced based upon sources believed to be reliable but their accuracy, completeness or correctness is not guaranteed. The statements or
expressions of opinion herein were arrived at after due and careful consideration to use as information for investment. Expressions of opinion contained
herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell
any securities. The use of any information shall be at the sole discretion and risk of the user.
BUALUANG SECURITIES PUBLIC COMPANY LIMITED MAY BE IN RELATIONSHIP WITH THE SECURITIES IN THIS REPORT. “Opinions,
projections and other information contained in this report are based upon sources believed to be accurate including the draft prospectus, but no
responsibility is accepted for any loss occasioned by reliance placed upon the contents hereof. Bualuang Securities Public Company Limited may from
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otherwise being interested in, any securities mentioned herein, This report does not constitute a solicitation to buy or sell any securities”. Investors
should carefully read details in the prospectus before making investment decision.
BUALUANG SECURITIES PUBLIC COMPANY LIMITED MAY ACT AS MARKET MAKER AND ISSUER OF DWs, AND ISSUER OF STRUCTURED
NOTES ON THESE SECURITIES. The company may prepare the research reports on those underlying securities. Investors should carefully read the
details of the derivative warrants and structured notes in the prospectus before making investment decisions.
BUALUANG SECURITIES PUBLIC COMPANY LIMITED IS OR MAY BE A UNDERWRITER/CO-UNDERWRITER/JOINT LEAD IN RESPECT OF THE
INITIAL PUBLIC OFFERING (“IPO”) OF SECURITIES.
Lead underwriter/
Underwriter/
Co-underwriter
Financial Advisor
EPG
Score Range
Score Range
Description
90 – 100
Excellent
80 – 89
Very Good
70 – 79
Good
60 – 69
Satisfactory
50 – 59
Below 50
Pass
No logo given
N/A
CORPORATE GOVERMANCE REPORT DISCLAIMER
This research report was prepared by Bualuang Securities Public Company Limited and refers to research prepared by Morgan Stanley. Morgan Stanley
does not warrant or guarantee the accuracy or completeness of its research reports. Morgan Stanley reserves copyright and other proprietary rights in
the material reproduced in this report. Morgan Stanley is under no obligation to inform Bualuang Securities or you if the views or information referred to
or reproduced in this research report change.
Corporate Governance Report disclaimer
The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy
of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock
Exchange of Thailand and the Market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The
result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not base on inside information.
The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be
changed after that date. Bualuang Securities Public Company Limited does not conform nor certify the accuracy of such survey result.
BUALUANG RESEARCH – RECOMMENDATION FRAMEWORK
STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expected positive total returns of 15% or more over the next 12
months.
HOLD: Expected total returns of between -15% and +15% over the next 12
months.
SELL: Expected negative total returns of 15% or more over the next 12
months.
TRADING BUY: Expected positive total returns of 15% or more over the next
3 months.
OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is
expected to outperform the relevant primary market index over the next 12 months.
NEUTRAL: The industry, as defined by the analyst's coverage universe, is
expected to perform in line with the relevant primary market index over the next 12
months.
UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is
expected to underperform the relevant primary market index over the next 12
months.
ROBINS - 5