Overview of the Retail Sector

The retail sector in Thailand is poised for healthy earnings growth in 2025, with an anticipated year-on-year (YoY) earnings increase of 14.1%. This growth will be fueled by positive same-store sales growth (SSSG), store expansions, and wider gross profit margins (GPM). Despite challenges such as high household debt, minimum wage hikes, and volatile steel prices, improving domestic consumption and a projected 15% rise in foreign tourist arrivals to 41 million in 2025 are expected to provide significant tailwinds. Central Retail Corporation (CRC) has been identified as the top pick for 2025 due to its promising outlook and attractive valuation.

CP All (CPALL)

Recommendation: Buy

CPALL is expected to deliver robust growth, with FY25 earnings projected to grow by 9.6% YoY. The company will benefit from strong sales momentum at its 7-Eleven stores, particularly in tourist destinations and gas station locations. Ready-to-eat items and high-margin non-food items like personal care and healthcare products are showing positive trends. CPALL plans to expand its store network by 700 outlets annually, with continued growth in online sales. Despite the positive outlook, the recent investment in the Lotus’s Mall Bangna (The Happitat) project is anticipated to slightly dampen FY25 earnings by 1%. CPALL is trading at a 19.3x FY25E P/E, which is 1.5 standard deviations below its 5-year mean, making it an attractive investment. Its FY25 ROE is projected at 19.6%, the second highest in the retail sector.

Central Retail Corporation (CRC)

Recommendation: Buy

CRC stands out as the top pick for the retail sector in 2025, with a projected FY25 core earnings growth of 13.5% YoY. This growth is driven by the full-year benefits from the reopening of its flagship department stores, Central Chidlom and Rinascente Milan, as well as the expansion of Thaiwatsadu, Go Wholesale stores, and GO! Mall. CRC’s SSSG is expected to improve to 2% in FY25, up from 0% in FY24. The company also aims to expand its GPM by 15 basis points YoY to 26.8%, supported by a rising proportion of private labels. Rental income is forecasted to grow by 8% YoY, driven by GO! Mall expansions and higher occupancy rates. At a trading multiple of 20.5x FY25E P/E, CRC offers compelling value, with its ROE forecasted to rise to 12.9%.

Home Product Center (HMPRO)

Recommendation: Buy

HMPRO is anticipated to achieve moderate earnings growth of 6.5% YoY in FY25, following a low growth of 1.8% in FY24. The company’s SSSG is expected to turn positive at 1% for Home Pro and 3% for Mega Home, supported by a low base effect and normalized impacts from road construction near key stores. HMPRO’s gross margin is expected to improve further, driven by operational efficiency and a higher proportion of private label products. The company’s dividend yield remains attractive at up to 4%, with an ROE of 25.4%, the highest among retail companies under coverage. HMPRO is trading at a 17.7x FY25E P/E, which is 2 standard deviations below its 5-year average.

Berli Jucker (BJC)

Recommendation: Buy

BJC’s earnings are forecasted to recover, with a 12.1% YoY growth in FY25, following contractions in FY23 and FY24. All of BJC’s business segments are expected to grow, including Big C, which is projected to deliver a 2% SSSG in FY25, supported by rising tourist arrivals and improving domestic consumption. The packaging segment will benefit from higher orders in Vietnam, while the consumer products segment will see gains from new product launches and government stimulus measures. BJC’s GPM is expected to improve due to better production efficiency and a higher contribution from high-margin products. The company is trading at 17.4x FY25E P/E with a projected ROE of 4.3%.

CP Axtra (CPAXT)

Recommendation: Buy

CPAXT is expected to achieve robust earnings growth of 19.8% YoY in FY25, driven by strong SSSG at both Makro and Lotus, ongoing store expansion, and increasing omni-channel sales. The company’s GPM is likely to improve further due to higher food and private label sales. However, its investment in the mixed-use ‘Lotus’s Mall Bangna’ project may pose challenges due to intense competition in the Bangna-Trad area. The project is expected to incur a loss of THB300 million in FY25, representing a 2.3% downside to CPAXT’s earnings. CPAXT is trading at 22.6x FY25E P/E, with a forecasted ROE of 4.1%.

Siam Global House (GLOBAL)

Recommendation: Hold

GLOBAL’s FY25 earnings are expected to grow by 21.3% YoY, driven by improved SSSG, new store openings, and increased profit contributions from overseas operations. SSSG is projected at +3% in FY25, recovering from -4% in FY24 due to a low base effect and stronger consumer spending. GLOBAL plans to open 7 new stores in FY25, although this is below its target of 11. However, falling steel prices and a slow SSSG recovery are expected to weigh on near-term performance. The company is trading at 24.5x FY25E P/E, with a projected ROE of 11.1%.

Dohome (DOHOME)

Recommendation: Hold

DOHOME is forecasted to deliver strong earnings growth of 35.7% YoY in FY25, supported by a low base effect and a projected SSSG of +4%. The company plans to resume store expansion in FY25 after no new outlets were opened in FY24. However, volatile steel prices pose a significant risk, as steel sales account for 32% of DOHOME’s total revenue. With a demanding valuation of 30.5x FY25E P/E and a low ROE of 7.1%, DOHOME’s growth comes with cautionary notes for investors.