CP Axtra Public Company Limited

Asia Plus Securities estimates combined normalized profit of seven commerce companies, namely BJC, COM7, CPALL, CPAXT, CRC, DOHOME and HMPRO, in the second quarter of 2026 at 16 billion baht, down 15% from the previous quarter but up 11% from a year earlier. The quarterly softening came from seasonal effects and higher selling and administrative expenses from energy costs and business expansion, while year-on-year growth was supported by better gross margins at almost every company. DOHOME posted the strongest profit growth in the group both quarter-on-quarter and year-on-year at 22% and 94% respectively, driven by higher steel product margins. CPAXT was the weakest, with profit down 33% from the previous quarter and 20% from a year earlier because selling and administrative expenses rose from expanded logistics capacity. The research team expects combined normalized profit in the third quarter of 2026 to still contract quarter-on-quarter due to seasonality, as the rainy season brings the lowest sales of the year and construction material margins normalize, which would weigh most on DOHOME. However, profit is expected to keep growing year-on-year thanks to a low base in the third quarter of 2025, business expansion and higher margins. Profit is forecast to accelerate again both quarter-on-quarter and year-on-year in the fourth quarter of 2026, which is the high season.

Analysts at CGS International Securities Thailand, or CGSI, said CPALL posted core profit of 7.4 billion baht, up 5.6% from a year earlier but down 17.1% from the previous quarter in the second quarter of fiscal 2026, in line with the firm's estimate and Bloomberg consensus. The modest year-on-year profit growth reflected weaker earnings at CPAXT and higher total operating expenses, partly offset by still-strong convenience store earnings and lower interest expenses. The convenience store and related businesses grew revenue 5.3% from a year earlier, with EBIT margin up 60 basis points to 10.0% and net profit up 13.5% from a year earlier. As a result, first-half fiscal 2026 net profit came to 16.6 billion baht, up 15.9% from a year earlier and equal to 53% of the firm's full-year estimate. Same-store sales in the convenience store business grew 0.8% in the second quarter of fiscal 2026, with low single-digit growth in April to May before flattening in June because the launch of the Thai Chuay Thai Plus scheme temporarily pulled purchasing power away from 7-Eleven stores. Management said during the analyst meeting after the results announcement that same-store sales in the first 10 to 12 days of June were negative at a low single-digit rate before gradually recovering late in the month. Spending per bill rose 0.9% from a year earlier while customer traffic fell 0.7% from a year earlier. However, merchandise margins remained strong, with food margins up 30 basis points from a year earlier, non-food margins up 20 basis points, and the average margin on all merchandise up 20 basis points to 28.0% in the second quarter of fiscal 2026, thanks to a higher sales mix of ready-to-eat products. Higher fuel costs for transporting goods from distribution centers to stores partly offset the benefit, leaving the convenience store business gross margin flat at 29.3%, while the ratio of selling, general and administrative expenses to operating revenue fell 30 basis points from a year earlier to 27.3%. CGSI analysts expect the third quarter of fiscal 2026 to remain CPALL's weakest quarter of the year, due to slower sales during the rainy season, the full-quarter impact of the Thai Chuay Thai Plus scheme, and still-soft results at CPAXT. However, the trough may not be as severe as feared, with management saying the impact in June was lower than expected and smaller than during the Khon La Khrueng Plus scheme in the fourth quarter of fiscal 2025. The analysts therefore expect convenience store same-store sales to recover significantly in the fourth quarter of fiscal 2026 once the Thai Chuay Thai Plus scheme ends in September, supported by the high season for tourism and a low base from government measures in the fourth quarter of fiscal 2025. In addition, lower oil prices should help reduce transport costs from distribution centers to stores and support gross margin expansion. CGSI analysts said consolidated core profit growth of only 5.6% from a year earlier masks improving fundamentals in the convenience store business, as seen in revenue growth of 5.3% from a year earlier, EBIT margin up 60 basis points to 10.0%, higher merchandise margins, and more effective cost control. At the same time, the impact from the Thai Chuay Thai Plus scheme was smaller than the market feared, so downside risk should ease in the third quarter of fiscal 2026 and the recovery should become clearer in the fourth quarter. CGSI therefore maintains a buy rating on CPALL with an unchanged target price of 61.50 baht, seeing upside from stronger-than-expected consumption and tourism recovery, while downside risks are a larger-than-expected impact from the Thai Chuay Thai Plus scheme and weak domestic demand weighing on sales.

Krungsri Securities Public Company Limited said CPALL reported 2Q26 core profit of 7.40 billion baht, up 6% from a year earlier but down 17% from the previous quarter, broadly in line with analyst and market expectations. Including a foreign exchange gain of 113 million baht, net profit was 7.51 billion baht, up 11% from a year earlier but down 18% from the previous quarter on seasonal factors. Year-on-year growth came from the convenience store business and related businesses, which accounted for 85% of profit, with profit rising 18% on a 0.8% increase in same-store sales. Store count expanded to 16,284, up 689 stores from a year earlier and 200 stores from the previous quarter. Selling and administrative expenses as a percentage of sales fell 20 basis points from a year earlier, and sales support income grew well, helping to offset CPAXT profit, which accounted for 15% of profit and fell 18% from a year earlier due to weaker same-store sales, with wholesale down 0.9% and retail down 3.9%. Gross margin fell 20 basis points from a year earlier, while expenses rose to support online channels, new stores, and Happitat. For 3Q26 core profit momentum, growth from a year earlier is still expected because convenience store same-store sales are still growing 1%, and energy cost pressure is expected to ease, so convenience store gross margin should expand from a year earlier. Meanwhile, core profit is expected to soften from the previous quarter on rainy-season seasonality. Krungsri Securities maintains a buy rating with a 2027 target price of 66 baht, viewing CPALL as a defensive growth stock driven by new product strategies and improving 7-Eleven margins, allowing profit to grow even while purchasing power recovers slowly. Core profit for 2026 to 2027 is forecast at 30.5 billion baht and 32.7 billion baht, growing 8% and 7% from a year earlier respectively. The stock trades at a one-year forward price-to-earnings ratio of only 13.6 times, about one standard deviation below its three-year average, with upside of around 35%.

Most brokers maintain a Hold or Neutral rating on CPAXT after second-quarter 2026 net profit fell both year-on-year and quarter-on-quarter to about 1.87 to 1.9 billion baht, below expectations, due to higher SG&A expenses from store expansion and omnichannel systems, as well as weaker same-store sales. The B2B wholesale business declined 0.9% and B2C retail fell 3.9% amid slowing purchasing power and the Thai-Cambodian border conflict. On the positive side, core business revenue grew from new store openings and online channels, along with income recognition from Lucky Frozen and data monetization. The Lotus's business in Malaysia also continued to grow, and a first-half dividend of 0.18 baht per share was announced, with the ex-dividend date on 20 August 2026, representing a yield of about 1.2%. However, analysts expect third-quarter profit to remain weak as it is the low season, and see downside risk to full-year 2026 profit estimates of about 9.45 to 9.67 billion baht. Additional pressure comes from losses at The Happitat project, which are expected to increase by about 200 million baht per quarter, and interest expenses from the acquisition of The Food Purveyors in Malaysia worth about 14 billion baht.

Land and Houses Securities assesses that the retail sector faces short-term challenges, with CPAXT's second-quarter profit falling 18 percent year-on-year despite higher total revenue, as selling and administrative expenses rose from accelerated branch expansion and Lotus's same-store sales declined nearly 4 percent due to indirect impacts from the Thai Helps Thai Plus scheme. Analysts expect the retail and wholesale sector to recover in the fourth quarter, which is the high season, and may get support from short-term stimulus measures such as increasing the state welfare card limit, which will benefit TNP. BJC is expected to see profit recovery in the second half, supported by its packaging business. Meanwhile, the tourism sector is viewed as the most attractive for long-term investment, as the government prepares concrete tourism stimulus measures in the fourth quarter, with recommended stocks including ERW, CENTEL, and MINT. The finance sector is a laggard with earnings poised to surge, with SAWAD expected to post quarter-on-quarter growth in the second quarter and stand out in the second half, while MTC is worth accumulating as its price has not risen much.

Kasikorn Securities and Krungsri Securities assess that CPAXT's second-quarter 2026 performance remains under pressure, with net profit expected to decline from both the previous year and the prior quarter. Kasikorn Securities forecasts net profit of 1.95 billion baht, down 14.7 percent year-on-year and 30.2 percent from the first quarter, while Krungsri Securities estimates core profit at 1.85 billion baht, down 19 percent year-on-year and 34 percent from the previous quarter, below the market expectation of around 2.4 billion baht. Key pressure factors include contracting same-store sales at both Makro and Lotus's, a gross margin decline to 14.0 percent, and a rise in the selling and administrative expense-to-sales ratio to 15.4 percent. The research team views that expense pressure will start to ease from the third quarter of 2026 and expects second-half earnings to gradually recover, driven by the wholesale business and retail recovery, as well as income recognition from Lucky Frozen in Malaysia. However, they maintain a hold recommendation, with Kasikorn Securities setting a target price of 16.30 baht and Krungsri Securities a target price of 16 baht per share.