CPALL:
CP ALL PUBLIC COMPANY LIMITED
CPALL operates the
convenience store business under the 7-Eleven trademark and franchises to other
retailers in Thailand and has invested in supporting
businesses such as manufacturing facility of food & bakery products, bill
payment services and so on.
Products Sold: Ready to eat food and beverages, personal
care products, stationery, household products, magazines
Customers: The customer groups are varied,
including people of every gender and age with different occupations, who live
and engage in daily activities near 7-Eleven stores.
Competitors: Tops market, Lotus express, Family mart and
other grocery stores
Item
|
2015
|
2014
|
2013
|
Sales (MB)
|
391,817.32
|
357,766.36
|
272,285.53
|
Total assets (MB)
|
329,082.94
|
326,410.05
|
288,665.48
|
Net income (MB)
|
13,682.46
|
10,153.77
|
10,536.99
|
Year end stock price (B)
|
39.25
|
42.50
|
42.00
|
BIGC: BIG C SUPERCENTER PUBLIC
COMPANY LIMITED
BigC Supercenter is Thailand’s leading modern trade
retailer. The business can be divided into two categories: retail and property.
The retail operations cover all the stores from large hypermarkets to proximity
stores, and the property operations refer to shopping centers that accompany
most of our hypermarkets and markets.
Products Sold: fresh food, dry food, clothing and accessories, electric appliances, and
home décor and accessories.
Major Customers: mid-to-low income customers, mid-to-high income customers,
wholesale and retail customers.
Competitors:
Tesco Lotus and Siam Makro.
Item
|
2015
|
2014
|
2013
|
Sales (MB)
|
129,407.19
|
131,229.97
|
126,921.74
|
Total assets (MB)
|
94,571.17
|
102,778.36
|
97,164.39
|
Net income (MB)
|
6,897.59
|
7,234.77
|
6,975.58
|
Year end stock price (B)
|
202
|
237
|
172
|
HMPRO: HOME PRODUCT CENTER PUBLIC
COMPANY LIMITED
The Company
is in the retail business of home improvement segment by selling goods and
providing complete range of services relating to construction, refurbishment,
addition, renovation, improvement of buildings and houses. It operates One Stop
Shopping Home Center under the trade name of HomePro.
Products
sold: goods and services relating to construction, refurbishment of houses, and
renovation materials
Scope of
operations: retail, wholesale of building materials and home improvement
products, and renovation services
Major
customers: retail customers, contractors and project owners
Competitors:
HomeWorks, HomeMarts, Boonthavorn
Item
|
2015
|
2014
|
2013
|
Sales (MB)
|
53,989.95
|
49,155.57
|
41,110.28
|
Total assets (MB)
|
46,991.04
|
44,312.82
|
35,941.68
|
Net income (MB)
|
3,498.81
|
3,313.33
|
3,068.48
|
Year end stock price (B)
|
6.80
|
7.73
|
6.82
|
MAKRO: SIAM MAKRO PUBLIC COMPANY
LIMITED
The principal business of the company is the operation of cash and carry trade centres throughout Thailand, under the name "Makro",
selling food and non-food products to registered member, predominantly to small
and medium size business, retailers, caterers, professional sectors and
institutions, government agencies, education institutions and other business
operators.
In retail market segment there are
many competitors but in wholesale market segment Makro is the number one and difficult
to find any competitors. However, Big C has launched BIG C JUMBO to get the
market share in wholesale market segment.
Item
|
2015
|
2014
|
2013
|
Sales (MB)
|
155,217.33
|
141,828.36
|
129,086.62
|
Total assets (MB)
|
47,909.80
|
43,665.53
|
36,104.34
|
Net income (MB)
|
5,378.48
|
4,889.89
|
4,298.58
|
Year end stock price (B)
|
35.50
|
36.25
|
29.00
|
Cross Sectional Analysis (for year
2015)
For the
cross sectional analysis, we take the year 2015 to compare the financial ratio
among the 4 companies in the commerce sector. The ratios are tabulated in Table
1 (at the end). For the liquidity ratio, HMPRO has the highest current ratio and quick
ratio, so HMPRO is in the best liquidity position.
For the
asset management ratio, CPALL and MAKRO have the highest inventory turnover
ratio. MAKRO has the highest Fixed Assets turnover ratio and Asset Turnover
ratio. CPALL and MAKRO have the lowest DSO. In the overall, MAKRO has the best
asset management ratio, followed by CPALL. BIGC is the third best, and HMPRO is
the worst among the four. MAKRO is the best in managing its assets to generate
sales.
For the debt
management ratio, BIGC has the lowest debt ratio, debt/equity and asset/equity
ratio, so it is the lowest leveraged company. BIGC’s TIE is second highest. So
BIGC is the best in debt management ratio.
For the
profitability ratio, HMPRO has the best GM, OPM, NPM and BEP. MAKRO has the
best ROA and ROE. So HMPRO is the best in terms of profit margin, MAKRO is the
best in the return from assets and equity.
In terms of
market value to book value ratio, BIGC is the lowest, followed by HMPRO. MAKRO
has the highest at 13.3.
Cash flow analysis (for year 2015)
Referring to
the Table below, among the four companies, only HMPRO achieve a net increase in
cash in year 2015. CPALL has the highest net cash flow from operation at 31
billion baht, but it paid back 41 billion baht of long term borrowing from
financial institution, which lead to a negative net change in cash. Next, BIGC has the second highest net cash flow
from operation at 11 billion baht, but it paid back 12 billion baht of short term and long term
borrowing from financial institution, which lead to a negative net change in
cash. For MAKRO, its cash flow from operation is almost the same as the cash
flow from investment. It paid out 4 billion in dividends and borrowed 2 billion
in long term borrowings.
Table : Cash
flow comparison of the four companies in year 2015 Unit:Million Baht
Item
|
HMPRO
|
CPALL
|
BIGC
|
MAKRO
|
Net Cash flow from operating activities
|
6,892.81
|
31,418.88
|
11,387.31
|
6,701.12
|
Net Cash flow from investing activities
|
-4,885.84
|
-17,409.31
|
-5,575.75
|
-6,370.76
|
Net Cash flow from financing activities
|
-1,717.74
|
-24,779.61
|
-14,857.25
|
-2,665.06
|
Net change in cash
|
289.22
|
-10,770.04
|
-9,045.69
|
-2,334.70
|
Time Series Analysis
The
following discussion is focused on the financial analysis of the four companies
through time, from 2013 to 2015.
HMPRO Cash flow analysis Unit:Million
Baht
Item
|
2015
|
2014
|
2013
|
Net Cash flow from operating activities
|
6,892
|
4,912
|
5,193
|
Net Cash flow from investing activities
|
(4,885)
|
(7,060)
|
(9,661)
|
Net Cash flow from financing activities
|
(1,717)
|
3,784
|
3,985
|
Net change in cash
|
289
|
1,636
|
(482)
|
Revenue
|
56,243
|
51,208
|
42,830
|
Net Income
|
3,498
|
3,313
|
3,068
|
Changes in Working Capital
|
993
|
(1,522)
|
647
|
Receivables
|
(89)
|
(209)
|
(159)
|
Inventories
|
(474)
|
(1,550)
|
(1,257)
|
Accounts Payable
|
692
|
966
|
2,052
|
Capital Expenditures
|
(3,789)
|
(5,494)
|
(9,065)
|
Common Dividends
|
(2,218)
|
(304)
|
(283)
|
Issuance of Debenture and Debt
|
3,500
|
5,050
|
4,000
|
For cash
flow from operations, the major source of cash are profit before financial
cost, depreciation (a non-cash flow item) and increase in operating
liabilities, Account Payables, and other current liabilities. The major use of
cash are increase in operating assets, inventories, Account Receivables.
For cash
flow from investing, the major use of cash is purchase of PP&E. It was used
in new store expansion.
For cash
flow from financing, in 2013 and 2014 and 2015, there was an issuance of
debentures and debt instruments, and increase in debt instruments. And in 2013,
there was short term borrowings which
was paid back in 2014. In 2015, there was repayment of debt and debentures, and
long term borrowings., so the net cash flow from financing was negative in
2015. In all three years, the major use of financing cash flow is the dividends
paid.
HMPRO DuPont Analysis
ROA =
NI/Sales * Sales/total Assets
ROE =
NI/Sales * Sales/total Assets * Total Assets/Total SH Equity
Item
|
2015
|
2014
|
2013
|
ROA
|
6.22*1.20
=7.45
|
6.47*1.16
=7.48
|
7.16*1.19
=8.54
|
The Net
profit margin is declining from 2013 to 2015.
The Asset
Turnover declines from 2013 to 2014, then increases from 2014 to 2015.
Overall, ROA
declines from 2013 to 2015.
Item
|
2015
|
2014
|
2013
|
ROE
|
6.22*1.20*2.78
=20.70
|
6.47*1.16*2.82
=21.10
|
7.16*1.19*2.82
6=24.13
|
The Net
profit margin is declining from 2013 to 2015. The main reason is due to the
investment in new business in HomePro Malaysia and Mega Home.
The Asset
Turnover declines from 2013 to 2014, then increases from 2014 to 2015.
The equity
multiplier declines from 2013 to 2015.
Overall, ROE
declines from 2013 to 2015, due to decrease in net profit margin. Furthermore,
in 2015, HMPRO paid stock dividend (increase in equity capital) and decrease
the equity multiplier, and decrease the ROE.
The
conclusion of DuPont analysis on HMPRO: HMPRO profitability performance is
declining from 2013 to 2015. For every one baht the investors put into HMPRO’s
assets, the return that investors get out of it, is declining.
CPALL Cash flow Analysis Unit:Million Baht
Item
|
2015
|
2014
|
2013
|
Net Cash flow from operating activities
|
31,419
|
26,370
|
21,624
|
Net Cash flow from investing activities
|
(17,409)
|
(15,957)
|
(191,408)
|
Net Cash flow from financing activities
|
(24,779)
|
(2,829)
|
(171,177)
|
Net change in cash
|
(10,770)
|
7,582
|
1,392
|
For cash
flow from operating activities, the net cash flow increases from 2013 to 2015
because net income is increasing every year. The contributors to positive
operating cash flow are net income, adding back of finance cost and income tax
expenses, and increase in operating liabilities. They are the major source of
cash. The major use of cash is increase in operating assets.
For cash
flow from investing activities, in 2013 CPALL investing cash flow was highly
negative because the company acquired Siam Makro Public Company Limited so the
company spent money so much in this asset. In 2014-2015 the cash flow are
negative because the company invested in assets.
For cash
flow from financing, in 2013-2015 the company had cash dividends paid. In 2013
financing cash flow was positive because the company got cash from Current Debt
and Long-Term Debt. In 2014 cash flow decreased because the company paid for
current debt. And In 2015, financing cash flow is negative because the company
paid so much for current and long- term
debt.
CPALL DuPont Analysis
Item
|
2015
|
2014
|
2013
|
ROA%
|
3.49*1.19
=4.16
|
3.00*1.10
= 3.30
|
3.87*0.94
= 3.64
|
ROE%
|
3.49*1.19*7.90
= 32.81
|
3.00*1.10*9.31
= 30.72
|
3.87*0.94*8.75
= 31.85
|
ROA = NI/Sales * Sales/total Assets
The Net
profit margin decreases in 2014 and increases in 2015. The Asset Turnover
increases from 2013 to 2015. ROA decreases from 2013 to 2014 and increases in
2015
ROE = NI/Sales * Sales/total Assets
* Total Assets/Tot SH Equity
The Net
profit margin decreases in 2014 and increase in 2015. The Asset Turnover
increases from 2013 to 2015. The equity multiplier increases in 2014 and
decreases in 2015.
And overall,
ROE decreases from 2013 to 2014 and increases in 2015
BigC Cash flow Analysis Unit:Million Baht
Item
|
2015
|
2014
|
2013
|
Net Cash flow from operating activities
|
11,387
|
11,646
|
10,072
|
Net Cash flow from investing activities
|
(5,575)
|
(3,610)
|
(7,156)
|
Net Cash flow from financing activities
|
(14,857)
|
(3,798)
|
(4,522)
|
Net change in cash
|
(9,046)
|
4,239
|
(1,606)
|
●
Cash flow from operating activities, the
major source of cash is profit before financial cost, depreciation and
amortization and increase in inventories, operating liabilities and trade
account and other payable.
●
Cash flow from investing activities, the
major use of cash is invested in subsidiaries and associates and purchase of
property, plant and equipment.
●
Cash flow from financing activities, in
2015; the company borrows a short-term from financial institution, so the net
cash flow from financing was negative. In 2013 to 2015, there was borrow a
long-term (financial lease contract liabilities), so the net cash flow from
financing was negative. In three years, the major use of financing cash flow is
the dividends paid because the company paid for debt.
BigC DuPont Analysis
Item
|
2015
|
2014
|
2013
|
ROA
|
5.16*1.41 = 7.28
|
5.35*1.32 = 6.06
|
5.34*1.35 = 7.21
|
ROE
|
5.16*1.41*2.03 = 14.77
|
5.35*1.32*2.44 = 17.23
|
5.34*1.35*2.62 = 18.89
|
ROA = Net Income/Sales * Sales/total
Assets
●
The
Net profit margin rises from 2013 to 2014 and decreases from 2014 to 2015.
●
The
Asset Turnover declines from 2013 to 2014 and increases from 2014 to 2015.
Overall, ROA
declines from 2013 to 2014, and then increases from 2014 to 2015.
ROE = Net Income/Sales * Sales/total Assets *
Total Assets/Total Shareholder Equity
●
The
Net profit margin rises from 2013 to 2014 and decreases from 2014 to 2015.
●
The
Asset Turnover declines from 2013 to 2014 and increases from 2014 to 2015.
●
The
equity multiplier declines from 2013 to 2015.
Overall, ROE
declines from 2013 to 2015.
Makro Cash Flow Analysis Unit:Million
Baht
Item
|
2015
|
2014
|
2013
|
Net Operating Cash Flow
|
6,701
|
7,660
|
5,306
|
Net Investing Cash Flow
|
(6,371)
|
(6,967)
|
(3,239)
|
Net Financing Cash Flow
|
(2,665)
|
(1,140)
|
(3,112)
|
Net Change in Cash
|
(2,335)
|
(447)
|
(1,045)
|
Free Cash Flow
|
1,229
|
1,731
|
2,581
|
Free Cash Flow
Growth
|
(29%)
|
(32.92%)
|
8.79%
|
Revenue
|
155,217
|
141,828
|
129,087
|
Net Income
|
5,378
|
4,922
|
5,426
|
Changes in Working Capital
|
(670)
|
1,067
|
(343)
|
Receivables
|
73
|
(359)
|
(227)
|
Inventories
|
(2,328)
|
(949)
|
(2,498)
|
Accounts Payable
|
1,543
|
2,450
|
2,448
|
Capital Expenditures
|
(6,379)
|
(6,984)
|
(3,248)
|
Common Dividends
|
(3,936)
|
(3,120)
|
(4,140)
|
Issuance of Long-Term Debt
|
2,000
|
2,000
|
-
|
Return on Assets %
|
11.75
|
12.25
|
12.61
|
Return on Equity %
|
39.85
|
41.04
|
39.66
|
Dividends (Baht/Share)
|
0.82
|
0.65
|
0.86
|
Payout Ratio % *
|
72.60
|
116.10
|
51.70
|
From the
statement, Free Cash Flow of Makro through out latest 3 years, 2015-2013 is net
positive in value but negative in growth of 2015 against 2014. This is because
the decline in operating cash flow for 12.52% against 2014 even the company's
sales increased and for deeper analysis, inventory increased a lots from the
prior year.
Makro had an
investment in fixed assets which was approximately 6,380 M.Baht in 2015. The
number of investment for 2 years is quite big due to the business expansion
such as Siam Frozen and also the investment of replacement, from ROA% and ROE%,
can assume that the the investment was worth.
However, the
high net income of 2015, Makro has paid dividend to shareholder 3,936 M.Baht
which was 0.82 Baht/Share.
Makro Dupont Analysis
ROE = Net Profit Margin x Asset Turnover x Equity
Multiplier
ROA = Net
Profit Margin x Asset Turnover
Item
|
2015
|
2014
|
2013
|
ROA
|
3.46*3.39 = 11.75
|
3.47*3.56 = 12.25
|
3.34*3.81 = 12.61
|
ROE
|
3.46*3.39*3.37 = 39.85
|
3.47*3.56*3.42 = 41.04
|
3.34*3.81*3.28 = 39.66
|
Makro’s ROE is 39.85%, 41.04% and 39.66% on 2015-2013
respectively. In other words, every baht that Makro invested in equity during
the 3 years can produce 40 baht of net income in average
Makro’s ROA is 11.75%, 12.25% and 12.61% on 2015-2013
respectively. In other words, every baht that Makro invested in assets during
the 3 years can produce 12 baht of net income in average.
The higher ROE and ROA is the higher for the firm and
shareholder.
Investment Recommendation
Based on the
cross sectional analysis of year 2015, and each company’s three year time
analysis, we shall recommend one company as the best investment in this sector.
Referring to
Table 1, HMPRO is in the best liquidity position. MAKRO is the best in managing
its assets to generate sales, and HMPRO is the worst. BIGC is the best in debt
management ratio. HMPRO is the best in terms of profit margin, MAKRO is the
best in the return from assets and equity, and HMPRO is the second best. In
terms of market value to book value ratio, BIGC is the lowest, followed by
HMPRO, and MAKRO has the highest ratio. CPALL has the biggest cash flow from
operations. HMPRO is the only with positive net cash flow.
From the 3
year trend analysis, HMPRO improves its liquidity ratio, asset management
ratio, debt ratio from 2013 to 2015, Its profitability ratio declines because
of its expansion in new stores in Malaysia and Thailand. CPALL financial ratio
is not improving from 2013 to 2015.. BIGC and MAKRO’s financial ratio are
mostly not improving nor declining from 2013 to 2015.
Compare to
industry average, HMPRO beats the industry in liquidity ratio, debt management
ratio and profitability ratio. However, its number is worse than industry
average in asset management ratio.
After
careful consideration, we recommend HMPRO as the one best company for
investment in this sector. The reason is based on best liquidity position, best
profit margin, second best in debt management ratio, low market value to book
value ratio, positive cash flow, and improving financial ratios from 2013 to
2015.
Table 1: Comparison
COMPANY | CPALL | BIGC | HMPRO | MAKRO | AVERAGE |
ITEM | 2015 | ||||
LIQUIDITY RATIO | |||||
Current Ratio (X) | 0.56 | 0.48 | 0.69 | 0.60 | 0.58 |
Quick Ratio (X) | 0.22 | 0.16 | 0.24 | 0.13 | 0.19 |
ASSET MANAGEMENT RATIO | |||||
Inventory Turnover (X) | 12.23 | 6.68 | 4.66 | 11.70 | 8.82 |
Days Sales Outstanding (Day) | 0.77 | 8.66 | 11.06 | 0.83 | 5.34 |
Asset Turnover (X) | 1.19 | 1.35 | 1.20 | 3.39 | 1.79 |
Fixed Assets Turnover (X) | 4.54 | 5.04 | 1.82 | 6.12 | 4.34 |
DEBT MANAGEMENT RATIO | |||||
Debt Ratio (X) | 0.87 | 0.51 | 0.64 | 0.70 | 0.68 |
Times Interest Earned (X) | 2.97 | 17.92 | 9.12 | 29.73 | 14.94 |
Debt to Equity (X) | 4.47 | 0.14 | 1.78 | 0.28 | 1.67 |
Assets to Equity (X) | 7.90 | 2.03 | 2.78 | 3.37 | 4.02 |
PROFITABILITY RATIO | |||||
Gross Profit Margin % | 21.77 | 22.80 | 30.66 | 11.13 | 0.68 |
Operating Profit Margin % | 6.30 | 6.40 | 8.82 | 4.20 | 14.94 |
Net Profit Margin % | 3.49 | 5.16 | 6.22 | 4.39 | 1.67 |
Return on Total Assets (ROA) % | 4.16 | 6.99 | 7.45 | 11.75 | 4.02 |
Return on Equity (ROE) % | 32.81 | 15.54 | 20.70 | 39.85 | 0.68 |
Basic Earning Power (BEP) % | 7.74 | 1.10 | 10.56 | 2.01 | 14.94 |
MARKET VALUE RATIO | |||||
Earnings per share (Baht/Share) | 1.52 | 8.36 | 0.27 | 1.12 | 5.24 |
Price / Earning (P/E) (X) | 3.05 | 22.89 | 25.56 | 31.35 | 5.20 |
Book Value per share (Baht/Share) | 4.64 | 54.01 | 1.05 | 2.67 | 5.14 |
Market to Book ratio (X) | 8.46 | 3.74 | 6.48 | 13.30 | 5.19 |
No comments:
Post a Comment