COM7 to Achieve Another All-Time High as Demand Intact, Sustaining Profits till Next Year

As Thailand will begin relaxing some of the COVID-19 lockdown restrictions tomorrow (September 1), COM7 is expected to be the leader in the IT market post-COVID on its aggressive growth potential

Thailand will begin relaxing some of the COVID-19 lockdown restrictions tomorrow (September 1). Shops and activities will be allowed to resume, such as restaurants reopening for dine-in at 50% capacity, shopping malls and department shops reopening, and domestic travel.

Following this issue, Maybank Kim Eng (Thailand) (MBKET) examined the path of Thailand’s largest IT chain store, COM7 Public Company Limited (COM7). A sales and earnings rebound is expected to begin in the fourth quarter of 2021 as a result of lockdown easing and the launch of new IT products, which are expected to receive good feedback as purchasing power in the middle-upper market and mobile phone replacement cycle is taking place almost 2 years after the COVID-19 epidemic, which is positive for sales. Based on the statistics of selling prices of 5G > 4G up to 13% while PC & NB business demand remains strong from Gaming, Streaming, Cryptocurrency awaiting the product until next year.

MBKET stated that the 2-month store closure and impact in 3Q21 is what the market has already realised. This is a good time to accumulate shares ahead of the gradual city reopening, while Apple and Xiaomi are launching new products in mid-September. This should bring profits back to new highs in 4Q21, supporting the overall growth this year as target +55% YoY. MBKET foresees COM7 will be the leader in the IT market post-COVID, due to aggressive growth potential, especially in the megatrend PC and IoTs market. Projected earnings growth is +20% over the next two years, recommending “BUY” with a target price of 82 baht.

COM7 will come back stronger than before due to the COVID-19 outbreak due to business expansion in every segment, including i) the proportion of BNN Online has increased after the addition of shopping assistants -free delivery, boosting margins in the long run. ii) Going forward with branch expansion from 936 to 1,000 stores by the end of the year, most recently acquiring product management rights in 45 BigC stores. iii) Expansion of a brand new store in the PC DIY group (E-QUIP ), penetrating the high-end PC market. iv) Joins with Realme as a Sole distributor, which is the second brand that has made a leap in development in IoTs. v) U Fund provides installment payment for Apple products, giving more competitiveness.

As of 15:05 local time in Thailand, the share price of COM7 rose ฿0.75/share or 1.08% to ฿70.00/share, with a trading value of 525 million baht.

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