HMPRO Q2 results beat market expectations despite adverse economic environment

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Home Product Center Plc (HMPRO), the leading home renovation and decoration store operator in Thailand, has come out to report a better-than-expected profit for its 2nd quarter operations.

HMPRO, which operates 87 HomePro stores, 6 HomePro ‘S’, 14 Mega Home stores and 7 HomePro stores in Malaysia, reported a net profit of 1.52 billion Baht against the market’s expectations of 1.5 billion Baht.

HMPRO’s Q2 2022 Results

The better-than-expected earnings comes despite the rising inflation, slowing economy, falling domestic consumption, soaring energy bills (for its trucks to transport goods to its stores) and soaring utilities bill for its operations.

“Our model points to a Q2 2022 net profit of 1.501 billion Baht, up 5% Year-on-Year (YoY) but down 1% Quarter-on-Quarter (QoQ). A YoY recovery in rental income and margin expansion led the expected YoY earnings growth from a relatively low base,” Chalinee Congmuang, sector analyst at Bualuang Securities said in a note to client in anticipation of the results just about a week ago.

For the 1st quarter of the year, HMPRO reported a net profit of 1.52 billion Baht, an increase of 0.60% QoQ, from 1.51 billion Baht the store operator had reported during Q1, 2022. As for the 1st half of the year HMPRO reported a net profit of 3.03 billion Baht an increase of 8.44% YoY.

Details of results of H1 2022 for HMPRO

HMPRO, which did not open any new stores during the 1st half of 2022, said that it has been trying to manage the rising cost of operations.

Chalinee, said that HMPRO’s ability to expand its margins so far this year, despite unfavorable conditions, is testament to its operational professionalism. In addition to being the leading home improvement player (focused on mid- to highincome demographics) with the strongest brand, efficient store management, a superior merchandise (especially house brands), and inventory management support the bottom-line when the broader environment is unfavorable.

Bualuang says that at the moment HMPRO lags other consumer plays; catch-up ahead the stock now trades at a PER of 27x for 2023, close to its Feb 2020 trough (when COVID-19 started to become an issue). Once the market recognizes HMPRO’s 2H22 profit growth profile, it should start bidding up the stock.

The broker has a ‘Buy’ rating with a target price of 17.50 Baht a share.

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