Company Overview

Berli Jucker Public Co Ltd (BJC) is a diversified conglomerate with operations spanning multiple sectors, including packaging supply chain, consumer supply chain, healthcare and technical supply chains, and modern retail supply chain. The company is a significant player in the consumer staples sector, with a market capitalization of Bt94,183.2m (approximately US\$2,742.1m). The key shareholders are TCC Corporation (45.68%) and TCC Holding (1995) (29.32%).

Stock Data

Bloomberg ticker: BJC TB

Shares issued: 4,007.8 million

3-month average daily turnover: US\$6.5 million

52-week high/low: Bt30.00/Bt19.20

Price Performance

BJC’s stock has experienced fluctuations over the past year, with a 52-week high of Bt30.00 and a low of Bt19.20. The stock price has seen a 21.8% increase over the past three months but has declined by 6.0% year-to-date.

Q3 2024 Financial Results

BJC reported Q3 2024 core earnings of Bt881m, marking a 26% year-on-year increase, although this represents a 26% quarter-on-quarter decline due to seasonal effects. The company’s net profit for the quarter was Bt701m, flat year-on-year but down 43% quarter-on-quarter. Excluding one-off forex losses, the core profit stood at Bt881m, up 26.3% year-on-year but down 26% quarter-on-quarter due to seasonality.

Key Financial Metrics

Performance Drivers

The key drivers in Q3 2024 were higher gross margins in the manufacturing businesses and lower SG&A-to-sales ratios. The gross margin improved to 19.7% from 19.2% in Q3 2023, driven by lower raw material costs and better high-margin product contributions. Modern retail gross margin increased slightly to 17.5% from 17.4% in Q3 2023, despite promotional campaigns launched in late Q3 2024 to attract low-income consumers.

Future Outlook

Looking ahead, BJC expects Q4 2024 EBIT to continue improving year-on-year, with a positive same-store sales (SSS) growth of 2-3% year-on-year, driven by the fresh food category. While there is some caution regarding the impact of palm oil prices on the consumer supply chain’s margin, this is expected to be partially offset by lower pulp and other raw material costs. Despite a continuous year-on-year improvement in Q4 2024 EBIT, net profit is expected to be slightly lower due to a higher effective tax rate.

Financial Forecasts

BJC’s financial forecasts for the upcoming years are as follows:

Valuation and Recommendation

UOB Kay Hian maintains a “BUY” rating on BJC with a slightly higher target price of Bt28.00, based on 21x 2025F PE. This valuation reflects a -1SD from its five-year mean (excluding the COVID-19 pandemic period) to account for BJC’s slower earnings growth compared to its grocery retailer peers.

Risks and Catalysts

Key risks include fluctuations in raw material costs and changes in government policies that could impact consumer spending. However, potential catalysts for the stock include a stronger-than-expected recovery in same-store sales growth and improvements in gross margins.

Environmental, Social, and Governance (ESG) Initiatives

BJC is committed to achieving net-zero emissions by 2050 and adheres to sustainable development frameworks. The company emphasizes social responsibility, fair treatment of workers, and compliance with relevant laws. BJC also follows good corporate governance practices and has received an “Excellent” rating from the Thai Institute of Directors (IOD).

Conclusion

BJC’s Q3 2024 performance demonstrates resilience and strategic growth in key areas, despite seasonal challenges and external economic factors. The company’s commitment to sustainability, combined with its diversified business operations, positions it well for future growth. Investors are encouraged to consider BJC as a promising addition to their portfolios, given the company’s strategic initiatives and potential for long-term value creation.