MD & A

Archive : Management's Discussion and Analysis.

Management’s Discussion and Analysis for three months and nine months ended 30 September 2017

Key highlight in 3Q17

  • Net profit increased YoY In 3Q17, net profit amounted to Baht 611 million, increasing by 19.8 % from 3Q16 due to higher sales, rental income, other income, lower financial cost and income tax expense, coupled with efficient operating costs management.
  • Total income increased YoY In 3Q17, total income reported to Baht 7,502 million, increasing by 4.2% mainly from new stores and renovated stores, higher rental income from both existing and new stores coupled with occupancy rate of 99%. Currently we operated 44 stores nationwide (25 department stores and 19 lifestyle centers) and 2 stores in Vietnam.

Comparison consolidated financial statement for 3 months ended 30 September 2017 and 30 September 2016

Unit : Million Baht
Consolidated financial statement
3Q17
3Q16
Increase
(Decrease)
% Change
Revenue from sale of goods 6,394 6,237 157 2.5%
Investment income 866 742 124 16.7%
Other income 242 219 23 10.6%
Total income 7,502 7,198 304 4.2%
Cost of sale of goods 4,848 4,720 128 2.7%
Selling expenses 1,619 1,576 43 2.7%
Administrative expenses 350 327 23 7.1%
Financial costs 19 23 (3) (14.3%)
Total expenses 6,835 6,645 190 2.9%
Share of profit of associates 97 103 (6) (5.9%)
Profit before income tax expense 764 656 108 16.4%
Income tax expense 121 111 (10) (9.0%)
Net profit 611 510 101 19.8%

Financial performance in 3Q17

  • Total sales : In 3Q17, total sales was Baht 6,394 million, increasing by Baht 157 million or 2.5% due to increased sale from new stores, renovated stores, ongoing implementation of product mix to cater customer demand. Those increase was in line with growth of overall economy which driven by export and also tourism while modest growth in private consumption.
  • Investment income : In 3Q17, the total investment income was Baht 866 million, which increased by Baht 124 million or 16.7% from 3Q16. This is mainly from an increase in rental income from both existing and new lifestyle centers that opened in 2016 and 2017 and renovated stores such as Saraburi, Ratchaburi and etc while the average occupancy rate increased to 99% in 3Q17 from 98% in 2Q17.
  • Total income : In 3Q17, the total revenue was Baht 7,502 million, which increased by Baht 304 million or 4.2% from 3Q16, mainly from an increase in total sale, rental income and other income.
  • Gross profit : In 3Q17, gross profits from sales amounted to Baht 1,546 million, an increase of Baht 29 million. However gross profit margin was pressured due to the product transitioning period that reduced gross profit margins from 24.3% in 3Q16 to 24.2% in 3Q17
  • Selling and Administrative expense : In 3Q17, selling and administrative expenses amounted to Baht 1,968 million, an increase of Baht 66 million or 3.4% from 3Q16. The increase can be attributed to expenses from new stores that opened in 2016 and 2017 as well as store expansion of international and private brands. However the Company was also able to efficiently control expenses of existing stores.
  • Financial costs : In 3Q17, finance costs amounted to Baht 19 million, a decrease of Baht 3 million or 14.3% from 3Q16.
  • Shares of profit of associates : In 3Q17, the shares of profit of associates was Baht 97 million, a decrease of Baht 6 million or 5.9% from 3Q16 (which derived from shared profit from Power buy Baht 32 million and Super sport Baht 65 million).
  • Income tax expense : In 3Q17, income tax expense amounted to Baht 121 million, a decrease of 10 million baht or 9.0% from 3Q16.
  • Net profit : In 3Q17, the net profit amounted to Baht 611 million, an increase of Baht 101 million or 19.8%. This was mainly due to higher total sale, rental income with occupancy rate of 99% and other income, efficient operating costs management coupled with lower financial cost and income tax expenses.

Comparison consolidated financial statement for 9 months ended 30 September 2017 and 2016

Unit : Million Baht
Consolidated financial statement
9M17
9M16
Increase
(Decrease)
% Change
Revenue from sale of goods 18,686 18,725 (39) (0.2%)
Investment income 2,480 2,187 293 13.4%
Other income 697 680 16 2.4%
Total income 21,862 21,592 270 1.3%
Cost of sale of goods 14,066 14,068 (1) (0.0%)
Selling expenses 4,678 4,559 119 2.6%
Administrative expenses 1,031 942 90 9.5%
Financial costs 56 63 (7) (11.0%)
Total expenses 19,831 19,631 200 1.0%
Share of profit of associates 374 372 2 0.5%
Profit before income tax expense 2,405 2,334 72 3.1%
Income tax expense 376 394 (18) (4.5%)
Net profit 1,921 1,805 116 6.4%

Financial performance in 9M17

In 9M17, the total income was Baht 21,862 million or an increase of 1.3% from 9M16. The gross profit was Baht 4,620 million and gross profit margin was at 24.7%, a slight decline from last year due to product transition period. Selling and administrative expenses was Baht 5,709 million or an increase of 3.8% from 9M16. Our financial cost was Baht 56 million or a decrease of 11.0% from 9M16. Share profit of associated was Baht 374 million or increase 0.5% from 9M16. Income tax expense was Baht 376 million or a decrease of 4.5% from 9M16. Net profit was Baht 1,921 million or an increase of 6.4% from 9M16 due to higher rental incomes, contribution from associates as well as lower financial cost and income tax expenses.

Comparison financial position for 9 months ended 30 September 2017 and 31 December 2016

Unit : Million Baht
Financial position
9M17
FY2016
Increase
(Decrease)
% Change
Cash and cash equivalents 1,531 2,219 (688) (31.0%)
Current investments 4 35 (31) (88.6%)
Other current assets 3,350 3,470 (120) (3.4%)
Other non-current assets 21,624 21,277 348 1.6%
Total assets 26,509 27,001 (492) (1.8%)
Total current liabilities 7,892 7,367 524 7.1%
Total non-current liabilities 1,940 3,437 (1,496) (43.5%)
Total liabilities 9,832 10,804 (972) (9.0%)
Total equities 16,677 16,197 480 3.0%
Total liabilities and equities 26,509 27,001 (492) (1.8%)

In 9M17, total assets amounted to Baht 26,509 million, a decrease of Baht 492 million or 1.8% compared to the end of 2016. Total liabilities amounted to Baht 9,832 million, a decrease of Baht 972 million or 9.0% compared to the end of 2016 due to lower accounts payable and other payable. Shareholders' equity totaled Baht 16,677 million, an increase of Baht 480 million or 3.0%.

Capital Structure

As of 30 September 2017, the Company's capital structure comprised of total liabilities of Baht 9,832 million while the interest bearing debt was Baht 2,867 million. Total shareholders' equity totaled Baht 16,677 million. The Company had a liability to equity ratio of 0.6 times, while a net interest bearing debt to equity ratio was at 0.08 times.

Prospects for the future malls

Total sale growth momentum in 2017 remains challenging as consumer shopping behaviors will continue to shift and slow recovery of consumption. We will focus on efficient operating costs management, implement product mix to cater customers’ demand and invest in growth initiatives that will help us to gain market share. In addition, property income still deliver strong sustainable growth for the Company. The store expansion plan is still on schedule, with hopes to opening three new stores in Thailand (One lifestyle center in Petchaburi in the first half, another in Kampaengphet, and a department store in Mahachai in the 4Q17). At the end of this year, we will have total forty-six stores Thailand and two stores in Vietnam. In 2018, the Company plans to open 2 lifestyle centers in Thailand.

Financial ratio

Key financial ratio
9M17
9M16
Gross profit margin (%) 24.7% 24.9%
Net profit margin (%) 8.8% 8.4%
Return on equity (%) 19.6% 18.7%
Return on asset (%) 14.3% 13.5%
Current ratio (Times) 0.6 0.7
Liability to Equity ratio (Times) 0.6 0.7