MBKET Holds a “BUY” Rating on GLOBAL as Sales Remain Positive despite Flooding

Maybank Kim Eng Securities (Thailand) (MBKET) has recommended a “BUY” rating on Siam Global House Public Company Limited (GLOBAL), with a target  price of 27.00 baht per share.

MBKET anticipates GLOBAL’s 3Q21 earnings to decline QoQ due to the low season, but to grow 39% YoY on the back of higher sales from SSSG (+11%) and new store openings despite the late-September floods that affected the Chaiyaphum and Nakhon Ratchasima branches.

3Q21 sales are expected to increase 14% YoY to 7.365 billion baht due to the expansion of the store network to 74 branches nationwide and lockdowns have limited impact as GLOBAL sells products via in-store and online.

Gross margins may decline QoQ in line with slower sales because entering the low season, but should increase YoY, owing to enhanced operational efficiency, steel prices hike and price adjustments for House brand products. 

The floods affect sales in the short term. However, it will recover from the need to repair the houses after the water recedes, resulting in 4Q21 earnings growing well YoY.