MD & A

Archive : Management's Discussion and Analysis.

Management’s Discussion and Analysis for three months and full year ended 31 December 2017

Key highlights in 4Q17

  • Net profit dropped YoY due to one-off items in last year In 4Q17, net profit amounted to Baht 820 million dropped by 18.8% as in 4Q16 the company recorded one-off items from reversal of bad debt and flood claims from Power buy, total amount of Baht 316 million. However, net profit from normal operation, increased by 14.6%. The growth was mainly from steadily growing of rental income with occupancy rate of 99%, higher other income, good expenses control, lower financial costs and income tax expenses.
  • Better gross profit margin performance In 4Q17, gross profit margin slightly increased to 25.2% from 25.1% in 4Q16 mainly from higher contribution of private label, despite some impacts from product transition period.
  • New stores in Mahachai and Kampeangpetch Opened 2 new stores in 4Q17, Mahachai- department store format and Kampeangpetch- lifestyle format. Currently, the Company operates 46 branches in Thailand (11 branches in Bangkok Metropolitan Region and 35 branches in up-country) and 2 branches in Vietnam.

Comparison consolidated financial statement for 3 months ended 31 Dec 2017 and 31 Dec 2016

Unit : Million Baht
Consolidated financial statement
4Q17
4Q16
Increase
(Decrease)
% Change
Revenue from sale of goods 7,303 7,353 (50) (0.7%)
Investment income 875 761 115 15.0%
Other income 312 481 (169) (35.1%)
Total income 8,491 8,595 (104) (1.2%)
Cost of sale of goods 5,464 5,506 (42) (0.8%)
Selling expenses 1,721 1,690 31 1.8%
Administrative expenses 398 367 31 8.4%
Financial costs 15 21 (6) (27.6%)
Total expenses 7,598 7,584 14 0.2%
Share of profit of associates 133 208 (75) (36.0%)
Profit before income tax expense 1,026 1,219 (193) (15.8%)
Income tax expenses 158 162 (4) (2.4%)
Net profit 820 1,010 (189) (18.8%)
Net profit excluding one-off items 796 694 101 14.6%

Note: In 4Q16 and 4Q17, the Company recorded one-off items amount of Baht 316 million and Baht 25 million respectively

Financial performance in 4Q17

  • Total sales : In 4Q17, total sales was Baht 7,303 million, decreased by Baht 50 million or 0.7%, mainly from high base of black clothing sales in 4Q16.
  • Investment income : In 4Q17, the total investment income was Baht 875 million, increased by Baht 115 million or 15.0% from 4Q16. The solid growth in total investment income was from rental income of new stores and also good rental income growth of existing lifestyle centers including those resumed full operations after renovation. The average occupancy rate maintained at 99.0%.
  • Total income : In 4Q17, the total income was Baht 8,491 million, decreased by Baht 104 million or 1.2% from 4Q16, mainly from one-off items last year. Excluding that reversal of bad debt, total income will increase by 1.4%.
  • Gross profit : In 4Q17, gross profits from sales amounted to Baht 1,839 million, decreased by Baht 8 million. Although sale dropped, gross profit margin slightly increased to 25.2% from 25.1 % in 4Q16 from higher contribution of private label, despite some impacts from product transition period.
  • Selling and Administrative expense (SG&A) : In 4Q17, selling and administrative expenses amounted to Baht 2,119 million, increased by Baht 62 million or 3.0% from 4Q16 resulting from new stores. However, existing stores’ SG&A was in good control.
  • Financial costs : In 4Q17, finance costs amounted to Baht 15 million, decreased by Baht 6 million or 27.6% from 4Q16 resulting from repayment of long term loans.
  • Shares of profit of associates : In 4Q17, the shares of profit of associates was Baht 133 million, decreased by Baht 75 million or 36.0% from 4Q16 (which derived from shared profit from Power buy Baht 53 million and Super sport Baht 80 million) due to one-off items from flood claims of Power buy in 4Q16.
  • Income tax expense : In 4Q17, income tax expense amounted to Baht 158 million, decreased by Baht 4 million baht or 2.4% from 4Q16.
  • Net profit : In 4Q17, net profit amounted to Baht 820 million or dropped by 18.8% as in 4Q16, the company recorded one-off items from reversal of bad debt and flood claims from Power buy, total amount of Baht 316 million. However, net profit from normal operation, increased by 14.6%. The growth was mainly from steadily growing of rental income with occupancy rate of 99%, higher other income, good expenses control, lower financial costs and income tax expenses.

Comparison consolidated financial statement for full year ended 31 Dec 2017 and 31 Dec 2016

Unit : Million Baht
Consolidated financial statement
FY2017
FY2016
Increase
(Decrease)
% Change
Revenue from sale of goods 25,989 26,078 (89) (0.3%)
Investment income 3,355 2,948 407 13.8%
Other income 1,009 1,162 (153) (13.1%)
Total income 30,353 30,187 166 0.5%
Cost of sale of goods 19,530 19,574 (44) (0.2%)
Selling expenses 6,398 6,248 150 2.4%
Administrative expenses 1,429 1,309 120 9.2%
Financial costs 71 84 (13) (15.2%)
Total expenses 27,429 27,215 214 0.8%
Share of profit of associates 507 580 (73) (12.6%)
Profit before income tax expense 3,431 3,552 (121) (3.4%)
Income tax expenses 534 556 (22) (3.9%)
Net profit 2,742 2,815 (74) (2.6%)
Net profit excluding one-off items 2,717 2,499 217 8.7%

Note: In 4Q16 and 4Q17, the Company recorded one-off items amount of Baht 316 million and Baht 25 million respectively

Financial performance in 2017

  • Total income : In 2017, the total income was Baht 30,353 million or increased by 0.5% from 2016. Total sales slightly decreased by Baht 89 million or 0.3% from 2016, partly from year-on-year impacted from high base of black clothing sales in 4Q16, while customers spending and sentiment remained stagnant early in the year. Investment income increased by Baht 407 million or 13.8% from 2016 mainly from rental income of new stores and also good rental income growth of existing stores.
  • Gross Profit : In 2017, the gross profit was Baht 6,459 million and Gross profit margin was at 24.9%
  • Selling and Administrative expenses (SG&A) : In 2017, selling and administrative expenses was Baht 7,828 million or increased by 3.6% mainly from new stores. However existing stores’ SG&A was in good control.
  • Financial costs : In 2017, financial costs was Baht 71 million or decreased by 15.2% from 2016 resulting from repayment of long term loans.
  • Share of profit of associates : In 2017, share profit of associates was Baht 507 million or decreased by 12.6% from 2016 due to one-off items from flood claims of Power buy in 4Q16.
  • Income tax expenses : In 2017, Income tax expense was Baht 534 million or decreased by 3.9% from 2016.
  • Net profit : In 2017, net profit was Baht 2,742 million or decreased by 2.6% from 2016 as in 4Q16, the Company recorded one-off items from reversal of bad debts and flood claims from Power buy, total amount of Baht 316 million. However, net profit from normal operation, increased by 8.7%. The growth was mainly from steadily growing of rental income with occupancy rate of 99%, higher other income, good expenses control, lower financial costs and income tax expenses.

Comparison financial position for full year ended 30 Dec 2017 and 31 Dec 2016

Unit : Million Baht
Financial position
FY2017
FY2016
Increase
(Decrease)
% Change
Cash and cash equivalents 1,805 2,219 (414) (18.7%)
Current investments 4 35 (31) (88.5%)
Other current assets 3,574 3,470 105 3.0%
Other non-current assets 22,171 21,277 894 4.2%
Total assets 27,554 27,001 553 2.0%
Total current liabilities 8,130 7,400 730 9.9%
Total non-current liabilities 1,902 3,404 (1,502) (44.1%)
Total liabilities 10,032 10,804 (772) (7.1%)
Total equity 17,522 16,197 1,325 8.2%
Total liabilities and equity 27,554 27,001 553 2.0%

As of 31 December 2017, total assets amounted to Baht 27,554 million, increased by Baht 553 million or 2.0% compared to the end of 2016, mainly from investment of new stores and increased in net book value of investments in associates. Total liabilities amounted to Baht 10,032 million, decreased by Baht 772 million or 7.1% compared to the end of 2016 mainly from repayment of long term loans. Total equity totaled Baht 17,522 million, increased by Baht 1,325 million or 8.2%.

Capital Structure

As of 31 December 2017, total interest bearing debt was Baht 1,768 million. Total interest bearing debt to equity ratio was at 0.1 times.