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CP All Pcl [SET:CPALL] is the flagship company of the Charoen Pokphand Group, which is controlled by billionaire Dhanin Chearavanont, and operates Thailand's largest convenience store chain, cash and carry, payment centers and related support services. The sole operator of the 7-Eleven convenience stores in Thailand, CP All said the number of its 7-Eleven stores rose to 8,618 in the third-quarter 2015, and is on track to have 10,000 branches by 2018. It competes with Japan's FamilyMart, Lawson Inc's Thai joint venture and Lotus Express, run by Tesco's Thai unit.
CP All said on November 10, 2015, that its third-quarter 2015 revenues were 96.36 billion baht, missing the 99.42 billion baht consensus estimate of 5 analysts, according to the Financial Times. The company posted third-quarter 2015 earnings of 0.36 baht per share, beating the 0.34 baht per share consensus estimate of 4 analysts. CP All said its same-store sales grew 1.6%, rising for the third consecutive quarter to a two-year high.
For 2014, CP All reported a dividend of 0.80 baht a share, which represents an 11.11% decrease from 2013. The 25 analysts covering the company expect dividends of 0.93 baht a share for the upcoming fiscal year, representing a year-over-year increase of 16.25%. The next earnings announcement from CP All, for the fourth-quarter 2015, is expected on February 15. Analysts are expecting earnings of 0.36 baht per share on revenues of 105.93 billion baht.
CP All shares took a 5.4% nosedive on December 3, after Thailand’s Securities & Exchange Commission said they issued a 30.2 million baht fine against CP All Vice Chairman Korsak Chairasmisak for using material non-public information to buy shares of cash-and-carry wholesaler, Siam Makro Pcl, in 2013. Another 5 people were also fined, said the regulator in the statement.
According to Bloomberg, the inside information was available to Mr. Chairasmisak during CP All’s negotiations with SHV Netherland BV to acquire a 64% stake in Siam Makro for about $6.6 billion in April 2013. CP All later increased its stake to 98
% via a tender offer. Siam Makro operates 57 Makro stores and 5 Siam Frozen stores.
From our technical viewpoint, CPALL just bounced off the lower trendline support of the bullish
descending wedge chart pattern. Investors seem not to be concerned about the high P/E (TTM) multiple of 30.26, as the shares closed on Tuesday at 43 baht a share, up 9.55% year-to-date. The company’s outstanding shares are 8.98 billion, while 4.84 billion shares are free float for public trading. If the demand remains high, the P/E multiple and the share price will probably remain buoyant.
In the short-term, there is a trendline resistance at 44 baht a share. Thailand's consumer sentiment rose to its highest level in seven months in December, the University of the Thai Chamber of Commerce reported last Thursday. Hence, demand for discretionary items and the numbers of customers per store should pick up as economic outlook improves.
According to the Financial Times, the consensus amongst 24 polled investment analysts covering CP All gave the company an Outperform rating, with the median 12-month price target of 54 baht a share.
Disclosure: No position and no recommendation. |
