Siam Global House Public Company Limited (GLOBAL) reported earnings of 972.28 million baht and total sales of 9,067.83 million baht for the 2Q21 ended June 30, 2021. Profit and revenue results exceeded market expectations and reached a new high, owing to growth in sales and gross margins.
Profitability for the first half of 2021 grew to 1,938.06 million baht, while total revenue increased to 17,896.18 million baht, showing a robust sales increase.
Maybank Kim Eng Securities (Thailand) (MBKET) retains a “BUY” recommendation on GLOBAL but increases the target price to 27 baht from 26 baht in anticipation of the company’s financial strength continuing until 2022.
MBKET stated that GLOBAL’s 2H21 earnings are likely to slow down due to seasonal effects and partly impact from lockdowns. However, earnings should grow significantly YoY on strong sales, focusing on selling high-margin products and better operational efficiency.
The analyst expects 3Q21 earnings to decline QoQ due to the low season and lower steel prices. However, earnings will continue to grow well YoY, with SSSG in July positive above 10%. The lockdowns in 13 provinces in July are expected to have limited impact. GLOBAL
temporarily shut 4 stores out of 73 stores as there are no branches in Bangkok.
As for further lockdowns in August, more store closures are expected, but GLOBAL can still sell via delivery and online. Moreover, most of the stores are located in the Northeastern region. The profit margin will be driven by pricing adjustment of house brand products, as well as a positive effect from higher sales volume.
GLOBAL’s 1H21 net profit accounted for 71% of MBKET forecast for this year, and 2H21 earnings remain healthy and continue to grow in 2022 with 5- 6 stores expansion per year. Therefore, the 2021-2022 earnings forecast has been revised up by 15% and 13%, respectively. Despite the continued store expansion, MBKET expects GLOBAL financial status to remain strong, with a net debt-to-equity ratio of 0.6-0.7x.