MAKRO sees shares rise to near 1-year high as funds look to buy in, plans aggressive entry into e-commerce and lifestyle shopping

Shares of Siam Makro Plc (MAKRO), Thailand’s leading wholesale and hypermarket operator, is heading towards a 1-year high, as investors await larger fund manager’s participation after the free float of MAKRO has reached the 15% limit required by funds to participate.

MAKRO, whose shares have risen by as much as 21.13% in the past 3-months and about 15% in the past 1-month, is trading at 43 Baht a piece putting the 456 billion Baht market capitalized retailer on the radar screens of many global fund managers who would be looking to participate in having a pie of the retailer.

To top this off, MAKRO says that the recovery in the economy is going to help the firm see better sales revenues on the retail especially Lotus hypermarket, while the reopening of the hotels and restaurants the wholesale business of Makro, is likely to benefit tremendously.

Saowaluck Thithaphan, Chief Financial Officer of MAKRO, revealed that after MAKRO received the entire business transfer of Lotus and offered ordinary shares for capital increase at the end of 2021, MAKRO shares there has been an increase in the number of minority shareholders (free float).

Recently, it has successfully increased the free float to 15%, which will benefit MAKRO stocks that will be calculated in various key indices, something that would help fund managers participate as these funds follow the stocks that are listed in various indices.

Saowaluck said that this would benefit MAKRO as the stock would be included in global indices which will bring about more interest from institutional investors especially foreign institutional investors who use the index as a component to select stocks for their investment portfolio.

Most of the stocks that are in these indices are required to have high market capitalization, have good fundamental and also have decent trading liquidity and a 15% free float of a 10 billion listed shares would offer good liquidity to investors.

As for the performance for 2023 Saowaluck said that the outlook looks good as of now. She said that for 2023 MAKRO expects to see continuous growth from branch expansion and development of online platforms to meet consumer behavior in the digital age who want convenience in ordering products has a good response by Makro’s wholesale platform and Lotus’ retail platform in e-commerce channels.

Apart from this MAKRO also expects to receive benefit from the overall recovery in the economy and tourism that has been recovering well after re-opening Thailand on July 1, 2022 after having been shutdown to tourism during the Covid-19 pandemic outbreak.

This will benefit the HoReCa business (HoReCa is Hotel, Restaurant, Catering) which is Makro’s customer base. The reopening of the tourism sector would help the HoReCa industry and thus benefit MAKRO.

As for the performance in 2022, MAKRO had reported for the first 9 months ending September 2022, the firm had total revenues of 345.44 billion Baht, an increase of 108.1%. The Q4 2022 data would be released in March.

Saowaluck said that during 2023, it is expected to see more revenue recognition from synergies between wholesale and retail businesses. After the merger of Makro and Lotus, MAKRO has become one of the leaders in the wholesale and retail business.

There is also a food service business and management of rental space within shopping centers. Most recently, the retail business has launched the service ‘Lotus North Ratchaphruek’, which is considered a prototype of new branch expansion in the form of ‘Smart Community Center’ that is a new way of operation, which changed the image of Lotus from a supermarket to become a community center.

A new landmark for shopping and other activities on Ratchaphruek road to meet the modern lifestyle of people in the community and creating an experience of living beyond just shopping.

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