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Big C Supercenter

Good time to sell at high price SELL

Big C Supercenter Plc (BIGC)

- Surprisingly high 4Q13 profit due to high gross margin

4Q13 net profit made the new high at B2.64bn, rising 92%qoq

and 41%yoy (36% beyond our expectation, 43% above

consensus). Gross margin improved significantly by 3%yoy to

18.3%, higher than 9M13 average of 13.8%. Aside from usually

high supplier rebate in 4Q, BIGC also benefited from other

subsidies, similar to 3Q13. Other factors were as expected: 1)

4Q13 sales volume stayed flat yoy as a result of the political

turmoil. Thus, same store sales contracted by 4.7%yoy. 2)

Rental income and other income grew by 10%yoy thanks to an

increase in rental space and income from advertising space. 3)

SG&A/Sales stayed at 17.3%, close to 9M13.

- Weak growth due to negative factors

Though FY2013 net profit was 12% higher than our forecast, we

maintain our forecast. However, we might revise it after the

analyst meeting on 13 February, as we are not sure whether

BIGC’s profitability would stay high and how many new branches

BIGC plans to open in 2014. Preliminarily, it would be hard for

BIGC to keep its profitability high, as fierce competition has

been forcing BIGC to give discount to promote sales every week

and purchasing power has been pressed by the political turmoil.

Thus, FY2014 profit would not grow significantly, especially in

1Q14.

- Price to rise. Good time to sell

BIGC’s return is -3%, close to the market’s return

(underperforming). However, 4Q13 earnings result was much

better than expected, so share price might rise for a short term.

This is a good time to sell. BIGC’s FY2013 dividend is B2.55

(1.4% dividend yield), will be paid on 5 March 2014.






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