Berli Jucker Public Co Ltd: Stronger momentum expected in 4Q25F
- 3Q25F core profit to show small y/y contraction from weak economy and softer tourist numbers
- Overall sales to decline, but gross margin and SG&A-expenses-to-sales expected to stay stable
- Quarterly earnings to hit a peak in 4Q25F with potential benefits from the upcoming Co-payment Upgrade
- Maintain BUY with unchanged DCF-based TP of THB24.00
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Big C performance remains pressured by tourist weakness. Big C still faced headwinds QTD, as SSSG remained in the negative low-single-digit territory (vs. -3.2% in 2Q25). The decline was primarily driven by weaker performance in tourist stores (accounting for c.17-18% of Big C sales), which saw a sharp drop in foot traffic due to fewer traveller numbers.
In contrast, non-tourist stores remained resilient with flat to slightly lower sales, while fresh food continued to outperform and post growth QTD. Management reaffirmed that the company is actively working to drive more local traffic through adjusted product assortments and targeted promotions.
Fresh food remains a key area of focus, supported by variety expansion (e.g., bakery, ready-to-eat, and imports) and price promotions to reinforce Big C’s value proposition. Nonetheless, we expect SSSG to show an improving trend m/m throughout the quarter in 3Q25.
On the rental side, income is still expected to contract slightly in 3Q25F due to a temporary disruption from ongoing hypermarket renovations. BJC planned renovations for 16 hypermarkets in 2025. However, management reiterated that renovated stores have shown improved SSSG and 5-6% higher rental income, indicating strong long-term ROI.
Packaging sales remain soft; glass bottle declined but aluminium can recovered. BJC’s packaging business is anticipated to deliver mixed performance QTD. Overall, sales should decline to the low-single-digit range y/y, mostly dragged by the soft glass segment, which fell to a high-single-digit rate (after the declining selling price from lower raw material costs). In contrast, aluminium can sales grew to the low-single-digit range, driven by a rebound in volume as a key customer resumed orders in May 2025.
Consumer segment continues to deliver solid growth. Consumer sales are estimated to grow in the mid- to high-single-digit range y/y in 3Q25F, led by steady food segment growth and positive momentum in the paper and personal care categories. We believe the appointments of new distributors such as 4-PL and DSG would also help support sales. Nevertheless, overseas sales would likely decline, largely due to FX headwinds.
Healthcare & Technical segment growth is softer from a high base last year. H&T segment sales (excluding Thai Scandic divestment) are anticipated to decline by a high-single-digit rate y/y, mainly from a high base of medical equipment sales. Including the Thai Scandic divestment, we expect sales to decline by a low-teen percentage y/y.
Gross margin to be flattish y/y with well-controlled SG&A expenses. Overall gross margin, as well as Big C gross margin, are expected to remain flattish. Big C's gross margin should have some support from lower logistics costs, cost-savings attempts, and a higher mix of fresh food – despite a lower mix of tourist products which yield high margin. Gross margin for packaging is expected to narrow y/y due to depreciation from new capacity and a less favourable product mix in the can segment.
Nonetheless, gross margin for the consumer segment is estimated to expand, helped by improved product mix and internal efficiencies (especially in paper production). H&T gross margin improved sharply, driven by the divestment of Thai Scandic, which generated low margins.
On SG&A expenses, we do not expect any major impact from Mini Big C closures as the company already recorded a write-off provision regarding the closures of non-performing Mini Big C stores in 2Q25 (41 stores in 2Q25 and 144 stores in 2H25). Thus, SG&A-expenses-to-sales should stay the same as last year.
Outlook
Better momentum in 4Q25F. We expect quarterly earnings to hit its peak in 4Q25 given seasonality. Performance would likely show some improvement on a y/y basis after international tourist numbers pick up and the overall economic situation eases. We note that Big C would also stand a good chance to benefit from the upcoming government stimulus measures, particularly the new phase of the co-payment scheme launching this October.
According to the latest data, this scheme would be called a “Co-Payment Upgrade,” with a revised structure aimed at better targeting government support (total budget of THB25bn).
The first group would consist of personal income taxpayers, who will receive enhanced benefits under a new 60:40 co-payment scheme – where the government covers 60% of eligible spending and the individual pays 40%. C.11mn people are expected to qualify for this group, with potential spending limits raised to c. THB1,200 per person.
The second group would include the general public and state welfare cardholders (c. 13.5mn people), who will continue under the original 50:50 co-payment model. The welfare cardholders may receive additional top-up support, increasing their benefits from THB300 to THB1,000.
The programme was one of the most popular during the pandemic period and helped boosting local consumption. According to Ministry of Finance data, in Phase 1, the consumption in the co-payment programme was mainly in F&B shops followed by restaurants. We note that Big C also has traditional trade owners and small restaurant owners under their customer profile.
In addition, the company introduced Don Jai models where the company has partnerships with traditional trade owners to supply their products to Big C. These shops are mostly eligible to participate under the Co-payment Upgrade scheme. Currently, there are c.17,000 Don Jai shops contributing c. 3-4% of Big C sales.
Recommendation
Reiterate BUY with an unchanged DCF-based TP of THB24.00. We maintain our earnings forecast this year as BJC’s outlook is on track with our full-year forecast. Our TP is based on a DCF valuation (WACC of 8.4% and terminal growth rate of 1.75%). The stock trades at a 17.6x FY25F P/E, equivalent to -1.4SD of its five-year historical average. We maintain our BUY call based on its 19% potential upside and steady earnings.
| FY Dec | 2Q2024 | 1Q2025 | 2Q2025 | % chg y/y | % chg q/q |
|---|---|---|---|---|---|
| Revenue | 39,739 | 38,500 | 38,561 | (3.0) | 0.2 |
| Cost of Goods Sold | (31,679) | (30,659) | (30,786) | (2.8) | 0.4 |
| Gross Profit | 8,060 | 7,841 | 7,775 | (3.5) | (0.8) |
| Other Oper. (Exp)/Inc | (8,070) | (7,715) | (7,948) | (1.5) | 3.0 |
| Operating Profit | (10.3) | 126 | (173) | 1,583.5 | (236.9) |
| Other Non Opg (Exp)/Inc | 3,305 | 3,095 | 3,224 | (2.5) | 4.2 |
| Associates & JV Inc | 17.7 | 2.09 | 29.0 | 64.2 | 1,287.8 |
| Net Interest (Exp)/Inc | (1,418) | (1,322) | (1,319) | 7.0 | 0.3 |
| Exceptional Gain/(Loss) | 19.9 | (168) | (157) | nm | (6.6) |
| Pre-tax Profit | 1,915 | 1,733 | 1,605 | (16.2) | (7.4) |
| Tax | (411) | (433) | (407) | (1.0) | (6.1) |
| Minority Interest | (276) | (208) | (208) | 24.7 | (0.1) |
| Net Profit | 1,228 | 1,091 | 990 | (19.4) | (9.3) |
| Net profit bef Except. | 1,208 | 1,259 | 1,147 | (5.1) | (8.9) |
| EBITDA | 5,670 | 5,488 | 5,370 | (5.3) | (2.2) |
| Margins | |||||
| Gross Margins (%) | 20.3 | 20.4 | 20.2 | ||
| Opg Profit Margins (%) | 0.0 | 0.3 | (0.4) | ||
| Net Profit Margins (%) | 3.1 | 2.8 | 2.6 |
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