Home Products Center: Waiting for demand to turn
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1Q26F net profit to come in at THB1.54bn (-9.8% y/y), dragged by a decline in SSSG across all formats
Negative SSSGs were driven by the absence of the Easy E-Receipt program, a soft economic environment, geopolitical conflicts, and intense competition
2Q26F SSSG is expected to remain negative, given the slow economic recovery, despite a manageable impact from the oil price hike
Cut earnings and DCF-based TP to THB7.00; maintain HOLD due to limited upside
Earnings preview
1Q26F earnings hit by an absence of Easy E-Receipt program. We forecast HMPRO to post 1Q26F net profit of THB1.54bn (-9.8% y/y, -3.8% q/q). The y/y drop in earnings is mainly due to negative SSSG, which led to lower cost leverage benefits and higher SG&A expenses from new stores. The q/q performance decline is largely attributable to seasonality.
Weak SSSG across all formats to drag sales. In 1Q26F, we estimate HomePro Thailand’s SSSG to come in at -12%, while Mega Home’s and HomePro Malaysia’s SSSGs are expected to be -2.5% and -7.0%, respectively. The plunge in HomePro’s SSSG is attributed to the absence of the Easy E-Receipt program (which negatively impacted SSSG by 10%), along with ongoing weak consumption of discretionary products. Nonetheless, we note that SSSG in March showed some improvement, with less contraction following strong demand for cooling items amid hot weather during the month.
For Mega Home, the impact from Easy E-Receipt is expected to be more limited. We also expect stores to benefit from some construction material stockpiling in March 2026, which could partially offset the fluid macroeconomic impact. Malaysia’s SSSG trend remained soft due to slow construction activity and competition in the market.
HMPRO’s SSSG for Thailand hub
Source of all data: Company, DBSVTH
Overall, we expect revenue to fall 5.5% y/y, less than the drop in SSSG, offset by store expansion. At end-1Q26, the company operated 149 stores (including 23 hybrid formats) vs. 136 stores at end-1Q25. During 1Q26F, we forecast rental income to increase y/y, supported by higher income from leased spaces in HomePro stores and Market Village shopping malls located in tourist destinations. Nonetheless, other income is expected to decline 3.5%, mostly due to lower supplier subsidies from reduced sales volume.
HMPRO’s revenue breakdown by business unit
Source of all data: Company, DBSVTH
Gross margin to be supported by efficiency and better private label mix. Gross margin is expected to improve by 10bps y/y to 27.1% in 1Q26F, primarily due to a more favourable mix (including private label products in both HomePro and Mega Home stores), along with efforts to enhance efficiency and stricter cost controls.
HMPRO’s quarterly gross margin
Source of all data: Company, DBSVTH
HMPRO’s private label sales mix
Source of all data: Company, DBSVTH
SG&A expenses-to-sales ratio is also expected to increase in 1Q26F (+70bps y/y), reflecting lower cost leverage from existing stores and new expenses related to store openings. Finance costs in 1Q26F are estimated to inch down 1% y/y, following a low-interest rate environment. Overall, 1Q26F net margin should settle at 9.0%, down 40bps y/y and q/q.
Outlook
2Q26F outlook remains challenging. We believe SSSG in 2Q26F will remain in negative territory due to ongoing uncertainties, which are likely to pressure discretionary demand. Based on discussions with management, logistics costs account for c.1% of HMPRO’s sales. Hence, based on our calculations, every 10% increase in logistics costs could lead to a 1% downside to HMPRO’s earnings, which we consider manageable. The company is also attempting to manage other costs and improve efficiency. In the event that additional costs become more substantial, the company may consider partially passing through these costs to retail prices.
Recommendation
Maintain HOLD with a lower TP of THB7.00 from THB7.60. We have cut our earnings forecast by 10% in FY25F and FY26F, mainly to reflect softer sales growth from negative SSSG of -2.5% in FY26F (vs. flat SSSG in our previous forecast), lower NSA space from a more conservative expansion plan, as well as higher SG&A expenses from lower operating leverage. As a result, we forecast the company to post a net profit contraction of 2%. Given the limited upside, ongoing economic uncertainties, and intense competition, we maintain our HOLD recommendation.
Quarterly / Interim Income Statement (THBmn)
| FY Dec (Btm) | 1Q25 | 2Q25 | 3Q25 | 4Q25 | 1Q26F | Chg. | Chg. |
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| y/y | q/q | |
| Sales | 18,019 | 16,867 | 16,100 | 16,903 | 17,028 | -5.5% | 0.7% |
| Cost of Goods Sold | (13,161) | (12,364) | (11,641) | (11,986) | (12,413) | -5.7% | 3.6% |
| Gross Profit | 4,858 | 4,502 | 4,459 | 4,917 | 4,615 | -5.0% | -6.1% |
| SG&A exp. | (3,192) | (3,192) | (3,293) | (3,641) | (3,145) | -1.5% | -13.6% |
| EBIT | 1,666 | 1,310 | 1,166 | 1,276 | 1,470 | -11.8% | 15.2% |
| Other inc./exp. | 641 | 613 | 623 | 845 | 619 | -3.5% | -26.8% |
| Associate inc. | 0 | (0) | (0) | (0) | (0) | -738.3% | -8.5% |
| Interest exp. | (177) | (178) | (182) | (174) | (175) | -1.2% | 0.5% |
| Pretax Profit | 2,130 | 1,745 | 1,606 | 1,946 | 1,914 | -10.2% | -1.7% |
| Tax | (423) | (346) | (303) | (344) | (373) | -11.7% | 8.3% |
| Net Profit | 1,707 | 1,399 | 1,304 | 1,602 | 1,540 | -9.8% | -3.8% |
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| Key operating stats |
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| HomePro TH | -3.3% | -9.0% | -5.7% | -8.0% | -12.0% | (8.7) | (4.0) |
| Mega Home | 0.2% | -1.6% | 0.5% | -7.0% | -2.5% | (2.7) | 4.5 |
| No. of stores | 136 | 136 | 142 | 148 | 149 | 9.6% | 0.7% |
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| Margins (%) |
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| Gross Margin | 27.0% | 26.7% | 27.7% | 29.1% | 27.1% | 0.1 | (2.0) |
| SGA % Sales | 17.7% | 18.9% | 20.5% | 21.5% | 18.5% | 0.7 | (3.1) |
| EBIT Margin | 9.2% | 7.8% | 7.2% | 7.5% | 8.6% | (0.6) | 1.1 |
| Net Margin | 9.5% | 8.3% | 8.1% | 9.5% | 9.0% | (0.4) | (0.4) |
Historical PE and PB band
Forward PE band (x) |
| PB band (x) |
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| Source: Bloomberg, DBSVTH estimates |
| Source: Bloomberg, DBSVTH estimates |
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