Stock Analysis: Do Home Pcl

One of the most succussful IPOs of 2019. DOHOME operates retail stores selling hardware, agriculture tools, furnishing, and other home renovation products to consumers in Thailand. In summary, it is a competitor of Siam Global, Home Pro and Thai Watsadu. After falling 44% in the first quarter this year, its share price has risen 122% in the second quarter, and a further 18% through thr current quarter.

It reported a relatively poor second quarter profit as it was affected by the closure of a few stores during April and May following the coronavirus outbreak. The cases of HMPRO and GLOBAL, for example, had investors ignoring the short-term impact to focus on long-term profitability and franchise value of the company.

DOHOME says it is pushing ahead with plans to open new stores this year. If the expansion plan shared in May is unchanged, it will add 84 new locations for its 84 warehouse type branches. It mainly operates in provinces there by avoiding head on competition with modern home renovation product stores — HMPRO.

The company is not very well researched yet. The reason for a sharp rise in its share price in 2Q, I observe, was investor faith in DOHOME’s ability to build franchises in long-term. Price fall in 1Q was due to unexplained reasons. Further its share price rise this year is in line with price performance of GLOBAL, its competitor.

Is the current valuation sustainable? It is quite challenging to assign a PE ratio multiple for a company in the expansion phase, hence its current PE multiple should be ignored. A simple measure to compare retailers is Price to Sales. On this measure, DOHOME looks relatively cheap when compared with GLOBAL and HMPRO.

I advice adding this stock to your portfolio.

But a word of caution  – DOHOME’s volatility is quite high, which points to a sharp correction in price irrespective of fundamentals. Therefore, buy on a share price down day.

Stock Price Info

Stock Fundamental

Peer Comparison

Stock Price Chart

COVID-19

Current Covid cases in steady decline

More people recovered from Covid-19 than there were new cases each day for the past week, the Centre for...

Latest article

Current Covid cases in steady decline

More people recovered from Covid-19 than there were new cases each day for the past week, the Centre for Covid-19 Situation Administration (CCSA) said...

BEC World shares surge following return of morning news star Sorayuth Suthassanachinda

Shares of BEC World (BEC), Thailand’s second-largest terrestrial TV operator, rose over 9 per cent on Tuesday after the return of its famous morning...

Pressure group issues 17-point takedown of Prayut’s track record

The pressure group Samakkhi Prachachon visited Government House on Tuesday to hand in a 17-point open letter on the alleged wrongdoings of Prime Minister...

Government defends top-up in latest Covid relief scheme

A 200-baht monthly top-up in the latest relief scheme for the country’s 13.7 million state-welfare card holders is “appropriate”, the Ministry of Finance said...

BMA to allow elderly to register for vaccines at hospitals

Bangkok will allow elderly people to register for Covid vaccines at more than 100 hospitals around the capital, the Bangkok Metropolitan Administration (BMA) said...

Photo Essay: Parks re-open in Bangkok

After much back and forth between the BMA and the government, parks has finally re-opened in Bangkok. Our James Wilson with the brief photo...