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CP All Pcl (SET:CPALL), a 40.56% stake owned by the Charoen Pokphand Group Co. Ltd. which is controlled by billionaire Dhanin Chearavanont, operates Thailand's largest convenience store chain, cash and carry, payment centers and related support services. The company now operates 9,043 7-Eleven convenience stores in Thailand, the world's second-largest 7-Eleven store network after Japan. It competes with Japan's FamilyMart, Lawson Inc's Thai joint venture and Lotus Express, run by Tesco's Thai unit.
In April 2013, the company paid about 215 billion baht ($6.6 billion) for the cash and carry chain Siam Makro Public Company Limited (SET:MAKRO) and now owns a 42.87% stake in MAKRO, as of August 25, 2015. The remaining 55.01% stake in MAKRO is owned by Siam Makro Holdings (Thailand) Limited, a subsidiary of CP All Group, and about a 2.12% stake is publicly traded on The Stock Exchange of Thailand (SET).
CP All said on May 11, 2016, that its net profit was 4.06 billion baht for the first-quarter 2016, exceeding an average 3.96 billion baht forecast by 7 analysts polled by Reuters. Total revenue rose 10% on the year to 108 billion baht, while its same store sales increased 2.6% year-on-year. For 2015, CP All reported a dividend of 0.90 baht a share, which represents a 12.5% increase from 2014. The 25 analysts polled by Financial Times covering the company expect dividends of 0.97 baht a share for the upcoming fiscal year, representing a year-over-year increase of 7.44%.
According to Reuters on Tuesday, cash-and-carry chain Siam Makro Pcl reported an 18.5% drop in quarterly profit due to weak margins and fierce competition among major chains, such as the Thai unit of Tesco and Big C Supercenter.
In late April, CP All Vice-Chairman Korsak Chairasmisak apologized at the annual shareholders meeting for his involvement in an insider trading scandal that raised concerns about corporate governance of his company, according to Reuters. As reported by the Nikkei Asia Review, a group of institutional investors has said it will buy no more shares until people involved take responsibility, such as by stepping down.
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 Mr. Korsak Chairasmisak for using material non-public information to buy shares of 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 the 64% stake in Siam Makro 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 broke out the bullish descending wedge chart pattern, but will most likely pull back if the stock can’t break out the multi-year trading range, between 48.50 baht and 37.50 baht. Investors seem not to be concerned about the high P/E (TTM) multiple of 31.68, as the shares closed on Wednesday at 47.25 baht, up 20.38% 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.
According to the Financial Times, the consensus amongst 26 polled investment analysts covering CP All gave the company an Outperform rating, with the median 12-month price target of 53.5 baht a share.
Disclosure: No position and no recommendation. |
