CP ALL PCL’s Leadership in Thailand’s Retail Market September 16, 2024

As the market anticipates a potential decrease in US interest rates, investors are becoming increasingly vigilant about the implications for both the stock market and the US dollar. Such a shift often leads to capital outflows from the US to higher-yielding markets, creating an opportunity for investors to diversify their portfolios and hedge against potential volatility.

One promising avenue for diversification is the Thai stock market, particularly for those looking to invest in emerging markets. Thailand offers a unique blend of growth potential, sectoral diversity, and geographic proximity, making it an attractive destination for investors. The lowering of US interest rates will likely weaken the US dollar, allowing the Thai baht to strengthen against it. This will further benefit Thai companies, especially those reliant on imports. This confluence of factors positions Thailand as a compelling investment opportunity in the current economic landscape.

Today, I’d like to highlight a potential defensive stock from Thailand merits attention. In the current economic climate, where a rate cut is likely on the horizon and uncertainty looms, industries that focus on consumer staples present a strong potential for high returns. This is particularly relevant in regions like Southeast Asia, where rapid urbanisation and evolving consumer behaviours are reshaping the market landscape.

In these regions, consumers are increasingly seeking convenience and premium products, driving growth for companies that cater to these demands. Companies with strong consumer brands hold a significant advantage, as they command customer loyalty, enabling them to maintain pricing power and protect profit margins. This brand strength often translates into higher profitability and increased market share, ultimately leading to stock price appreciation.

Moreover, during uncertain economic times, investing in consumer-driven growth companies offers a defensive strategy for your portfolio. These companies tend to perform well regardless of the economic cycle, providing stability and helping to reduce overall portfolio risk. Therefore, keeping an eye on consumer staple companies in Southeast Asia could be a smart move for those looking to navigate these volatile times while still seeking growth opportunities.

CP All Public Company Limited (CPALL) stands out as a leader in Thailand’s retail industry, making it a stock worth considering for your portfolio. As the exclusive operator of 7-Eleven convenience stores across Thailand, CPALL has solidified its position as a dominant player in the market. With over 13,000 stores nationwide, it caters to millions of consumers daily, offering essential products and services that are integral to everyday life.

However, CPALL’s influence extends beyond convenience stores. The company also has a significant presence in the wholesale and retail grocery sectors through its ownership of Makro and Lotus supermarkets. This diversified retail portfolio not only broadens its market reach but also provides a stable revenue base, even during economic downturns. CPALL’s ability to command strong consumer loyalty, coupled with its strategic expansion into neighbouring countries like Cambodia and Laos, makes it a compelling investment opportunity in today’s volatile economic environment.

As we delve deeper into the financial dynamics of the retail sector, CPALL’s Q2 2024 financial statement stands out as a prime example of strategic success and resilience. The company reported a remarkable total revenue of 248,026 million Baht, marking a 6.9% quarter-over-quarter increase. This growth reflects the company’s successful strategic adjustments, including the implementation of Online-to-Offline (O2O) strategies and the enhancement of product and service offerings across its business units. These initiatives have proven crucial in adapting to the evolving consumer behaviours in today’s new normal.

Net profit for the quarter reached an impressive 6,239 million Baht, representing a substantial 40.6% increase from the previous quarter, underscoring the effectiveness of CPALL’s operational strategies. The convenience store and Lotus businesses were significant contributors to this growth.

The company’s ongoing expansion efforts were also evident, with the total number of 7-Eleven stores in Thailand increasing to 14,854 as of 30 June, 2024, up from 14,545 at the end of 2023. In Q2 2024 alone, 124 new stores were added. Additionally, CPALL reported a same-store sales growth (SSSG) of 3.8%, with average daily sales per store reaching 86,656 Baht, further highlighting the company’s strong market presence.

CPALL’s focus on working capital management and operational efficiency has had a positive impact on its financial health, providing a strong foundation for future growth. As the company continues to expand its footprint and optimise its operations, it is well-positioned to navigate the dynamic retail landscape and capitalize on emerging opportunities. With its solid financial performance and strategic foresight, CPALL is poised to remain a key player in the retail industry, ready to address new challenges and drive continued success in the coming years.

Recognizing the Thai stock market as a prime opportunity for diversification, CPALL stands out as a top performer in Thailand’s retail industry. Traditionally, investing in Thai stocks would be challenging for us in Singapore. However, there’s great news! CP All is now available on the Singapore Exchange (SGX), making it easier than ever to invest in this market leader.

By purchasing CP All Singapore Depository Receipts (SDRs) on the SGX, you gain direct exposure to CP All’s strong performance without the need to navigate the Stock Exchange of Thailand (SET). These SDRs give you beneficial interest in CP All’s Non-Voting Depository Receipts (NVDRs) listed in Thailand, making it a seamless and convenient way to invest in one of Thailand’s leading companies, all from the comfort of Singapore. With CP All’s proven track record of success and its dominant presence in Thailand’s retail sector, this listing on SGX opens the door for Singaporean investors to tap into the growth of this leading Thai company.

In conclusion, as global financial dynamics shift with the anticipation of US interest rate cuts, the Thai stock market presents a promising opportunity for diversification, particularly in consumer staples. CP All Public Company Limited (CPALL) exemplifies the potential within Thailand’s retail sector, demonstrating impressive financial growth and strategic resilience. With its strong market presence, extensive store network, and diversified retail portfolio, CPALL stands out as a compelling investment. The company’s robust financial performance in Q2 2024, coupled with its strategic expansion and operational efficiency, underscores its ability to navigate economic uncertainties and capitalize on emerging opportunities. For investors seeking stability and growth in a volatile economic environment, CPALL represents a solid choice to consider in their portfolio.

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