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Published on March 13, 2008

It recommended a "buy" for the three retail giants as they are expected to report strong operating results. The brokerage has upgraded its earnings-per-share forecasts and stock-price targets for the three.

Big C Supercentre, which runs supermarkets and discount stores, reported fourth-quarter earnings per share (EPS) rising 44 per cent to Bt3.12, due to rental income and supply rebates.

Big C's outlook is positive, with eight new stores planned for this year and four for next year. The new government's pro-business posture does not inhibit modern trade expansion.

The brokerage hiked Big C's EPS estimates up 11 per cent from Bt3.36 to Bt3.73 this year and Bt3.65 to Bt4.05 next year. It also changed its methodology from discounted cash flow to price-to-earnings ratio as demand picks up.

"Big C stock is attractively trading at a price-to-earnings ratio of 14.5 times in 2008 and provides a dividend yield of 4 per cent," the research paper said.

Big C sells fresh and prepared food, as well as a wide range of consumer products ranging from apparel, cosmetics, houseware, toys, appliances, furniture to electronics and hardware.

CP All, which operates 4,200 7-Eleven convenience stores in Thailand and owns 30 per cent of 44 hypermarkets in China, is viewed optimistically by Credit Suisse.

The company's fourth-quarter net profit increased 32 per cent on quarter. In China, losses widened 38 per cent on year in the first quarter in 2007 and one hypermarket had to be closed down.

CP All's 2008 new store growth estimate is 11 per cent. Margin expansion is possible from a change in product mix, as food is more profitable than non-food items.

The brokerage increased its 2008 EPS estimate by 2 per cent from Bt0.62 to Bt0.63 due to new tax benefits, and projected CP All's stock price at Bt12.80.

It sees CP All shares trading attractively at 15 times price to earnings this year.

Siam Makro Plc operates 41 cash-and-carry discount stores with a focus on hotels, restaurants, caterers, wholesalers, retailers and individual members.

The company delivered solid full year 2007 results, with net profit up 6 per cent, thanks to cost control and eight stores opening in the last quarter.

Siam Makro is a defensive play on consumer staples as it has least exposure to regulatory risk because of its wholesale strategy, which caters to mom-and-pop retailers.

The brokerage increased Siam Makro's EPS forecast up 4 per cent from Bt6.65 to Bt6.94 for this year, and up 3 per cent from Bt7.75 to Bt7.9 for next year, on the back of actual 2007 margin expansion due to lower pre-operating and operating expenses.

As a cost leader, Siam Makro is attractively trading at 14.4 times price to earnings this year.

The Nation