Robinson Department Store Public Company Limited (ROBINS) is one of the largest and leading department store operators with over 50% market share nationwide. Robinson Department Store can successfully occupy strategic locations in each regional area, especially those located along the economic borders, which are expected to enjoy explosive growth after the arrival of the ASEAN Economic Community.
Financial Summary
Business Description
- Nature of business
- Product type
- Business strategies
- Shareholder structure
The company offers product lines, which include soft line products and hard line products. Expansion of new stores - the company aims to continuously expand its stores within a country in order to establish itself in a potential area and become the first mover.
Macro-Economic Analysis
- GDP forecast breakdown
- Number of foreign tourist arrivals
- Inflation rate
- Consumer confidence continues to recover
- Impact from Asian Economic Community (AEC)
It is only slightly adjusted in the inflation rate estimate without adjusting in the numbers. Since Thailand is in the center of ASEAN, the positive impact of AEC is that the support facilitates investment and trade activities in other ASEAN members, as it is now more free and easier.
Industry Analysis
Strong influence of social media and e-tailing platforms
Due to the favorable nature of the department store business, there was more competition than last year not only in Bangkok but also in the country's big cities. Despite this, department store operators continued to expand their operations by opening new stores in many areas or renovating existing ones.
Upcountry consumer market for the new growth driver in Thai retailing
Competition Analysis
Competitive positioning
Robinson positions the secure platform as a company-specific area and creates multiple distribution channels and promotions for its business. Because the company has been doing business with its suppliers for years, Robins has bargaining power with its suppliers. The threat of substitute products/services has little impact because Robins has created its own unique products and services.
The buyer's high bargaining power with a wider variety of distributions to serve consumers, such as e-commerce, makes the company offer low prices and price choice for customers, which could ultimately lead to a price war in the near future. Robins faces intense competition in the market as these customer groups are exposed to different choices in terms of distribution channels and offers. However, Robins has created the online ordering and delivery services for their customers from the company website.
Investment Summary
- Governmental support on a policy of inject cash to rural area Robinson Department Store PCL would be a major beneficiary of the
- Interest free loans for grass-root economy boosting spending power in rural area
- Store expansion and Store renovation boosts revenue
- Superior profitability and dividend paid
- A boost from 2015E
- Most attractive valuation
These area increases will contribute to full revenue for 2015 and the following years. The company also plans to open 3 new Lifestyle Centers in Buriram, Mae Sod and Srisaman in the second half of 2015, which will increase revenue and profit margin, as well as new government support for the grassroots economy, increasing spending power in rural areas, including interest. -Free- loans for the first two years to be given to people through 59,000 Village Funds with a budget of 59 billion Bt. In response to business expansion, ROBINS plans to open new stores at least 4-5 stores every year, which will cover all provinces that may have more expansion.
Also, the renovation plan is on track, the company plans to renovate the top 20 stores by 2016 in order to align them with its new store concept as a modern and lifestyle center. Alan Thomson (President of Management) said that normally sales increase by more than 10% after renovations, but from the current weak consumption growth is expected to be slightly lower in 2015, but will increase more in the forecast year 2016 from a better picture of the economy and stable politics. Encouraging private label is another factor to increase profit through margin expansion in the medium and long term is to increase the proportion of retailers of private label sales.
ROBINS results in the high income as a policy to pay dividends of 40% of the net profit from normal operations according to the consolidated financial statements after taxes on income and legal reserve. However, actual payment will be made subject to the Board of Directors, as deemed appropriate, and to the cash flow of the Company in each financial year. The transition to a mall developer with rental space, from merely a department store operator, should increase recurring rental income and shorten the time to breakeven to less than a year for lifestyle malls, versus an average of three years for the normal department format save.
Valuation
- Discounted Cash Flow Model: FCFF
- Key assumptions
- Common size analysis
- Trend analysis
- Financial ratios - Return
However, the overall revenue and net profit of ROBINS appears to be significantly higher than The Mall because there were more number of stores across the country due to different capacity of asset size for these two companies. Hence, The Mall group would be a good benchmark to compare with the firm in this industry. ROBINS had a lower proportion of SG&A than The Mall, which is significantly reflected by positive fixed assets and human resource utilization.
ROBINS had a small financial cost and almost the same as The Mall which means that ROBINS and The Mall have a strong financial cash flow. Balance sheet (liabilities and equity): ROBINS' source of funds was fundamentally different, compared to The Mall. This could be a reason of economic recession and The Mall did not manage the risk of macroeconomics well.
ROBINS' inventories are trending downward, just like those of The Mall, due to better inventory management and improved inventory operations. The profitability ratio is interpreted as gross profit margin, operating margin and net profit margin between two companies, ROBINS and The Mall. ROBINS and The Mall have a low solvency risk and do not have large inventories.
Investment Risks and Downside Possibilities
- Risks from competitors
- Natural disasters hit on site
- Economic slowdown
- Labor shortage risk
- Sensitivity analysis on the identified investment risks
The company diversifies the risks of natural disasters, which Robinson focuses on customers in provinces where there are fewer competitors but who can be found in the traditional retail market. If the impact remains high and continues, ROBINS can significantly increase its market share in the retail market. Therefore, the company is very concerned about retaining its current workforce and seeking new generations and friendly service to our customers.
First, we emphasize how much a change in the risk variable will accelerate a move in our recommendation price. In additional to this analysis, we assessed the effect of change in variables to our predicted target price.
Investing for Future Growth 2015-2020 (ROBINS)
Management and organizational chart
Corporate Governance (CG)
The Company Secretary shall inform each director in advance of the time, date and time of the meeting so as to enable all directors to allocate time for the meeting, particularly the chairman, sub-committee chairman and the president, unless such director is unable to attend. attend at the right time. for reasonable cause. Regarding the remuneration of the directors, the Company proposes for the approval of the shareholders every year as well as presents the policy and clear criteria for the remuneration with details showing the remuneration by position, types of remuneration and compared with the amount paid in the previous year to the shareholders for recognition . Regarding the appointment of the director, the Company presents the CV of the director candidates together with the letter of invitation to the shareholders' meeting.
When voting for a director, the Company offers shareholders the opportunity to vote for individuals. With respect to the appointment of an auditor and the consideration of audit fees, the Company presents adequate information about the auditor to demonstrate independence, including a number of appointed years (in case of appointment of the existing auditor). With regard to the dividend payment, the Company shall provide adequate and clear details, facts and reasons about the proposed amount for which approval is sought, including a comparison with the previous year's dividend payment.
All supporting documents in both Thai and English versions together with the proxy forms, Forms A, B and C, are also published on the Company's website at least 30 days before the meeting. The company supports all types of shareholders, including institutional investors, to participate in the general meeting without restriction on the right to participate in the meetings of shareholders who attend late. The company uses computer and bar code system for registration and vote counting to speed up and reliable information.
SWOT Analysis
Five Forces Analysis
- Threat of potential new entrants: Score 1
- Threat of substitute products/ services: Score 2
- Bargaining power of buyers: Score 3
- Rivalry among current competitors: Score 2
Therefore, Robinson department stores have been established for years and have more bargaining power. With the increase in the number of retail businesses such as hypermarkets and specialty stores, there is increasing pressure to lower margins in order to attract more customers. This can lead to a price conflict between department stores and e-commerce sellers such as Lazada online shopping, which is gaining popularity.
The competitive rivalry is now reserved, but it will not have much effect for Robinson because the company has its strategy to create another distribution channel from the customer who can place an order according to the company's website and will deliver the product to hand of the customer with a fast transport to the destination. . Also Robinson has its launch promotion many times a year attracting customers with seasonal product and trend.
Income Statement including Projections
Balance Sheet including Projections
Statement of Cash Flow including Projections
Assumption of Sales Growth
Nature of Business
Private label
One price ‘Just Buy’
Product Type
AEC Reflection to Thailand
Industry analysis
The growing investment and trade activities in the border areas have also attracted Thai companies looking to take advantage of the opportunities to serve locals, tourists and consumers from neighboring countries. The self-service chain Makro focuses on wholesalers, retailers and catering companies in the surrounding areas and is actively strengthening its presence in the border areas. Over the past two years, six megastores have been opened in the North and Northeast regions. Due to their convenient location – connecting Thailand with Laos – cities in the northeastern region are considered the country's fastest-growing consumer markets.
For example, Udon Thani and Nong Khai have become popular transit hubs and tourist destinations for Thai visitors, as well as for foreign visitors traveling within Thailand and traveling to Laos.
Thailand GDP and Inflation
GDP forecast breakdown
The global economic slowdown caused the Bank of Thailand to cut its economic expansion rate estimate for the current and next year by 2.7% and 3.7% respectively. Public sector expenditure and tourism were the main factor in the inflation rate. Oil prices fell slightly due to a factor in the decline in inflation, but the decline in domestic and global oil demand caused the Bank of Thailand to subtly lower headline inflation.
Dividend Discount Model
