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(Unchanged)
TP: Bt 155.00
Downside : -15.1%
(From: Bt150.00 )
21 FEBRUARY 2014
Change in Numbers
Earnings revisions
BIGCs 4Q13 came in better than wed expected on a sudden jump in gross margin to 18.3% from 15.2% in 4Q12 and 13.2% in 3Q13 on the back of stepped-up rebate and cost reduction initiatives. We lift our 2014-16 earnings forecasts by 6-8% to reflect the cost-cutting schemes as: 1) we boost our gross margin assumption by 90-103bp p.a., 2) we assume a lower SG&A/sales ratio over the long term. Nonetheless, we lower our new stores assumption for this year to come into line with BIGCs latest plan and also bring down new store numbers in 2015-16F. Our 12month DCF-based TP is raised by 3% to Bt155.0/share.
COMPANY VALUATION
Y/E Dec (Bt m) Sales Net profit Consensus NP Diff frm cons (%) Norm profit Prev. Norm profit Chg frm prev (%) Norm EPS (Bt) Norm EPS grw (%) Norm PE (x) EV/EBITDA (x) P/BV (x) Div yield (%) ROE (%) Net D/E (%) 2013A 2014F 2015F 2016F
118,177 126,634 134,511 145,208 6,976 7,217 7,329 (1.5) 7,217 6,700 7.7 8.7 3.5 20.9 11.7 3.6 1.4 18.2 33.3 7,973 8,325 (4.2) 7,973 7,387 7.9 9.7 10.5 18.9 10.4 3.2 1.6 17.7 18.5 8,905 9,969 (10.7) 8,905 8,395 6.1 10.8 11.7 16.9 9.1 2.8 1.8 17.5 1.8
Thanachart Securities
6,976
PRICE PERFORMANCE
(Bt/shr) 270 250 230 210 190 170 150 Feb-13 BIGC Rel to SET In dex (%)
Jun-13
Oct-13
COMPANY INFORMATION
Price as of 20-Feb-14 (Bt) Market cap (US$ m) Listed shares (m shares) Free float (%) Avg daily turnover (US$ m) 12M price H/L (Bt) Sector Major shareholder 182.50 4,621.9 825.0 41.4 1.8 252.0/163.0 Retail Casino Group 60.0%
Maintain SELL
Our earnings upgrades dont lead us to change our SELL call on the counter. We regard the hypermarket segment as very competitive with BIGC competing in a volume growth game. We forecast the companys slower expansion clip to lead to unexciting EPS growth of 8% p.a. in 2013-16F. Despite what we view as an inexpensive 2014F PE of 20.9x versus the average for its peers of 25.7x, its three-year PEG of 2.5x looks dear to us. We project only 3.5% EPS growth this year based on our assumptions of flat SSS and gross margin maintaining the level from last year.
This report is prepared by Thanachart Securities. Please contact our salesperson for authorisation. Please see the important notice on the back page
COMPANY NOTE
BIGC
PHANNARAI TIYAPITTAYARUT
THANACHART RESEARCH
COMPANY NOTE
BIGC
PHANNARAI TIYAPITTAYARUT
Risk-free rate (%) Market risk premium (%) Beta WACC (%) Terminal growth (%) Enterprise value add investments Net debt (2013F) Minority interest Equity value
825 155.00
THANACHART RESEARCH
COMPANY NOTE
BIGC
PHANNARAI TIYAPITTAYARUT
Valuation Comparison
Ex 3: Valuation Comparison With Regional Peers
EPS growth Name BBG code Country 14F (%) 15F (%) PE 14F (x) 15F (x) P/BV 14F (x) 15F (x) EV/EBITDA 14F (x) 15F (x) Div yield 14F (%) 15F (%)
3.7 na na 1.3
17.7 0.4 na na
14.1 0.4 na na
CA FP CO FP
France France
16.4 6.0
15.4 12.2
16.4 14.9
14.2 13.3
2.0 1.1
1.9 1.1
6.6 7.5
6.1 7.0
2.7 4.0
3.0 4.4
Aeon UNY
8267 JP 8270 JP
Japan Japan
0.1 (71.5)
6.8 (1.9)
14.6 14.3
13.7 14.6
1.0 0.5
0.9 0.5
6.3 7.0
5.9 7.1
2.1 3.9
2.2 3.9
023530 KS 004170 KS
S. Korea S. Korea
14.1 11.4
18.5 10.7
9.8 12.7
8.2 11.4
0.7 0.9
0.6 0.8
5.7 11.3
5.2 10.4
0.5 0.5
0.5 0.5
Wal-Mart Stores
WMT US
USA
(3.7)
0.0
15.2
15.2
2.8
2.8
7.9
7.9
2.8
2.8
Big C Supercenter* CP All* Siam Global House * Home Product* Siam Makro* Robinson Dept Store *
Average
Sources: Company data, Thanachart estimates Based on 20 February 2014 closing prices
(15.1)
15.9
21.0
17.5
3.1
2.9
10.2
9.0
2.5
2.9
THANACHART RESEARCH
APPENDIX
BIGC
PHANNARAI TIYAPITTAYARUT
COMPANY DESCRIPTION
Big C Supercenter Pcl (BIGC) operates a modern retail business via hypermarkets and supercenters. It also has a town center business providing rental space both inside and outside BIGCs buildings to entrepreneurs. BIGC sells consumer goods and foodstuffs at reasonable prices. Products at BIGC stores are in five main categories: dry foods (58.0%), hard line (16.4%), soft line (8.1%), home line (9.6%) and fresh foods (7.8%).
COMPANY RATING
Financial management
Manage ment
5 4 3 2 1 0
5 4 3 2 1 0
Liquidit y
Weak None
Source: Thanachart
THANACHARTS SWOT ANALYSIS S Strength Stronger bargaining power via the Carrefour acquisition. Its market share is catching up with the market leader Tesco Lotus. More balanced geographical coverage with 50% of stores in the capital and 50% upcountry. BIGC has most of its stores in Bangkok and major tourist provinces. High business stability with its dual retail-property model. T Threat Economic and political risks. Natural disasters. Competitive nature of the hypermarket segment. W Weakness Tough work during accelerating expansion phase. Product variety needs to be improved to capture the higherend customer segments.
O Opportunity Urbanization allows store penetration in the provinces. Expansion in various formats: hypermarkets, market stores (supermarkets), Mini-Big C stores and Pure health, beauty and pharmacy stores.
CONSENSUS COMPARISON
Consensus Target price (Bt) Net profit 14F (Bt m) Net profit 15F (Bt m) Consensus REC 199.00 7,329 8,325 BUY: 7 Thanachart 155.00 7,217 7,973 HOLD: 8 Diff -22% -2% -4% SELL: 11