7.5 per cent surge on MAKRO shares due to strong second-quarter results

Siam Makro PCL (MAKRO) shares rose up by 7.45 per cent to 43.25 baht per share on Tuesday morning trade (11:00 a.m.), increasing by 3.25 baht from 40.50 baht.

The rise reportedly came as a result of the company’s financial performance in the second quarter of 2020 which was better than expected. The earnings beat TISCO Securities’ estimate by 47.5 per cent and Bloomberg’s consensus by 28.5 per cent.

MAKRO’s net profit in the second quarter of 2020 stood at 1,180 million baht, down 0.4 per cent year-on-year and 29.8 per cent quarter-on-quarter.

The strong performance was driven by higher Same-Store Sales Growth (SSSG) and lowered Selling, General & Administrative (SG&A) rate due to reduced sales and promotional expenses.

Three new stores opened during the second quarter; one of them is in Yangon, Myanmar. The MAKRO group’s stores increased to 136 in total.

MAKRO announced a cash dividend payment for common shareholders at the rate of 0.40 baht per share on September 4, 2020, and scheduled for an XD sign on August 24, 2020.       

According to the TISCO company note, the Gross Profit Margin (GPM) of MAKRO fell by 58 baht per share to 9.5 per cent quarter-on-quarter, in line with the estimate, due largely to the change in sales proportion.

TISCO predicts MAKRO’s earnings in the second quarter to mark the bottom for the foreseeable future, as the COVID-19 outbreak lockdowns have been lifted and demand from household customers should improve.

TISCO recommends to ‘hold’ MAKRO shares at the target price of 35.00 baht per share, while Finansia Syrus Securities suggests to ‘buy’ at the target price of 50 baht per share.

MAKRO shares price opened on Tuesday’s afternoon session (2:30 p.m.) at 42.50 baht per share, increasing by 2.25 baht or +5.59 per cent.

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