Home Product Center PCL: Margins to cushion soft SSSG in 3Q26F
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- 3Q26F net profit is estimated at THB1.4bn (+4.8% y/y), supported by gross margin improvement and lower finance costs
- SSSG remained weak in July-August, although September showed signs of improvement, with Mega Home turning positive
- Expect 4Q26F earnings to improve q/q on seasonality, but with limited y/y growth on slow recovery of purchasing power
- Maintain HOLD with an unchanged TP of THB7.20, as limited upside and a challenging retail environment
Earnings preview
Slower growth expected for 3Q26F. We estimate HMPRO to deliver 3Q26F net profit of THB1.4bn (+4.8% y/y, -14.3% q/q). The y/y earnings growth should be driven mainly by gross margin improvement and lower finance costs, despite weak SSSG and high SG&A expense level. On a q/q basis, earnings are expected to decline due to seasonality, as 3Q is typically HMPRO’s low season. We forecast overall net margin to be 8.3% (+20bps y/y and -90bps y/y).
SSSG remains soft, although September shows some improvement. HomePro Thailand’s SSSG is expected to be flat to negative low-single digit in July before weakening to negative low-to-mid single digit in August. Mega Home’s SSSG is forecasted to be flat in July and declined by low-single digit in August. The soft SSSG was still negatively impacted by the soft purchase power and lower demand after stockpiling attempts in 2Q26, while the heavier rain in 3Q also weighed on store traffic.
For September, however, we expect HomePro’s SSSG to recover to be flat and Mega Home to turn slightly positive. HMPRO has recently launched the new promotional campaigns (flexible discount program) which it has received good feedback from the customers in September. Overall, we forecast 3Q26F SSSG of -1.5% for HomePro Thailand and flat for Mega Home.
Basket size remains supportive, but traffic continues to decline. The weak SSSG reflects lower traffic as consumers remain cautious amid the economic slowdown. While spending per ticket initially remained positive in July-August, it has started to weaken alongside lower prices and rainy weather. We expect the company’s sales momentum to remain constrained in the near term, despite some improvement in September. We forecast 3Q26F sales to increase 2.5% y/y to THB16.5bn, supported by store expansion.
Gross margin to improve y/y, despite softer volume. We forecast 3Q26F gross margin at 28.1%, up 40bps y/y but down 40bps q/q. Front-end gross margin should improve by around 30-40bps, supported by mainly private-brand sales and some prolonged impacted of inventory gains. However, back-end margin remains linked to sales volume, limiting the overall margin improvement. We expect 3Q26F gross margin to remain slightly above 1Q26’s 27.5%, but below 2Q26’s 28.5%.
SG&A deleverage to limit earnings upside. We forecast SG&A expenses to decline 2.1% y/y to THB3.4bn, although SG&A/sales ratio should increase 70bps y/y to 20.7% as lower sales volume limits operating leverage. As a result, EBIT margin is expected to decline 110bps q/q to 7.4%, but improve 20bps y/y.
Interest costs to remain manageable in 3Q26F. Finance costs are estimated at THB164mn, mostly flat q/q and down 10% y/y. The company is expected to issue a c.THBB2bn bond towards late 3Q, with an estimated coupon of 1.6-1.8%, versus current funding costs of above 2%. We therefore expect the impact from the new bond to be limited in 3Q26F, with potential benefits becoming more visible thereafter.
Outlook
Earnings hitting quarterly peak in 4Q26F. We expect the operating environment to remain challenging in the near term, as purchasing power has yet to show a clear recovery and traffic remains weak. Nevertheless, the improvement in September SSSG, particularly at Mega Home, is an encouraging sign. We will monitor whether the improvement can sustain into 4Q26F, which is seasonally stronger. Margin remains an important earnings driver, with private-label sales, enhancing product assortment and vendor support helping to partly offset weak sales and limited operating leverage. The prolonged weak economy, on the other hand, could help encouraging the usage of private-label items which offer more attractive prices. Overall, the earnings should strongly improve q/q but growth would remain limited q/q in 4Q26F.
Share buyback program ended below approved limit. HMPRO’s second treasury stock program ended on 31 August 2026, with the company having repurchased 83mn shares, or 0.63% of total shares, for THB515mn, well below the approved ceiling of 394.5mn shares (3.0%) and THB2.96bn. Including the previous program, HMPRO now holds 263.2mn treasury shares, equivalent to 2.0% of total shares, with a total value of THB1.87bn.
Management cited the still-limited recovery of the Thai economy and the need to preserve cash flow as the main reasons for the lower-than-approved buyback. The company can resell the treasury shares after three months and within three years from the program’s end, while the timing and conditions for resale will be subject to further board consideration.
Recommendation
Maintain HOLD with an unchanged TP of THB7.20. We maintain our FY26F–27F earnings as the current outlook remains on-track with our full-year forecast. Currently, we assume our FY26F same-store sales growth (SSSG) forecast at -2.5%, while forecasting FY26F net profit growth of 2%. Given the limited upside to our revised TP, ongoing macroeconomic uncertainty, and an increasingly competitive retail landscape, we reiterate our HOLD recommendation.
Quarterly / Interim Income Statement (THB,mn)
| FY Dec (Btm) | 1Q25 | 2Q25 | 3Q25 | 4Q25 | 1Q26 | 2Q26 | 3Q26F | Chg. | Chg. |
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| y/y | q/q | |
| Sales | 18,019 | 16,867 | 16,100 | 16,903 | 16,514 | 17,403 | 16,502 | 2.5% | -5.2% |
| Cost of Goods Sold | (13,161) | (12,364) | (11,641) | (11,986) | (11,971) | (12,439) | (11,865) | 1.9% | -4.6% |
| Gross Profit | 4,858 | 4,502 | 4,459 | 4,917 | 4,543 | 4,964 | 4,637 | 4.0% | -6.6% |
| SG&A exp. | (3,192) | (3,192) | (3,293) | (3,641) | (3,262) | (3,487) | (3,415) | 3.7% | -2.1% |
| EBIT | 1,666 | 1,310 | 1,166 | 1,276 | 1,280 | 1,477 | 1,222 | 4.8% | -17.3% |
| Other inc./exp. | 641 | 613 | 623 | 845 | 640 | 656 | 629 | 1.1% | -4.0% |
| Associate inc. | 0 | (0) | (0) | (0) | 0 | 0 | (0) | 0.0% | -183% |
| Interest exp. | (177) | (178) | (182) | (174) | (171) | (164) | (164) | -9.9% | 0.2% |
| Pretax Profit | 2,130 | 1,745 | 1,606 | 1,946 | 1,750 | 1,970 | 1,688 | 5.0% | -14.3% |
| Tax | (423) | (346) | (303) | (344) | (346) | (376) | (322) | 6.2% | -14.3% |
| Net Profit | 1,707 | 1,399 | 1,304 | 1,602 | 1,404 | 1,594 | 1,366 | 4.8% | -14.3% |
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| Key operating stats |
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| HomePro TH | -3.3% | -9.0% | -5.7% | -8.0% | -12.7% | -1.0% | -1.5% | 4.2 | (0.5) |
| Mega Home | 0.2% | -1.6% | 0.5% | -7.0% | -3.7% | 1.4% | 0.0% | (0.5) | (1.4) |
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| Margins (%) |
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| Gross Margin | 27.0% | 26.7% | 27.7% | 29.1% | 27.5% | 28.5% | 28.1% | 0.4 | (0.4) |
| SGA % Sales | 17.7% | 18.9% | 20.5% | 21.5% | 19.8% | 20.0% | 20.7% | 0.2 | 0.7 |
| EBIT Margin | 9.2% | 7.8% | 7.2% | 7.5% | 7.8% | 8.5% | 7.4% | 0.2 | (1.1) |
| Net Margin | 9.5% | 8.3% | 8.1% | 9.5% | 8.5% | 9.2% | 8.3% | 0.2 | (0.9) |
Source: Company, DBSVTH
Historical PE and PB band
Forward PE band (x) |
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| Source: Bloomberg, DBSVTH estimates |
| Source: Bloomberg, DBSVTH estimates |
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