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- Downgrade from BUY to HOLD with lower TP of THB20.00
- Weak 3Q25 core profit of THB628mn (-29% y/y), which largely disappointed expectations due to softer-than-expected revenue and high expense levels
- Economic challenges and Big C renovations were key factors weighing down performance; these are likely to persist in 4Q25F
- Cut earnings by 13%/12% in FY25/26F to reflect a more conservative revenue outlook
3Q25 results missed expectations
Weak 3Q25 results. BJC delivered 3Q25 core profit of THB628mn (-29% y/y, -45% q/q), which was 18% below market expectations and 27% below our estimates. The key deviation from our estimates stemmed from lower-than-expected sales and rental income, as well as elevated expense levels. Q/q, the drop in earnings was due to seasonality and higher finance costs, following negative carrying costs from debenture refinancing and financial lease expenses related to a new distribution centre.
Overall, the softer y/y performance was mainly due to the worsening economic situation, renovation of Big C stores during the quarter, and a lower number of tourists, despite an improving gross margin. As a result, we observed a decline in both sales and EBIT margin for the quarter. During this period, BJC recorded a forex gain of THB9mn, resulting in a 3Q25 net profit of THB637mn (-9% y/y and -36% q/q).
Big C performance remains pressured. Big C continued to face headwinds in 3Q25, with SSSG contracting by 3.8% (vs. -3.2% in 2Q25). The decline was primarily driven by store renovations and a high base from Digital Wallet spending in 3Q24, which collectively weighed down SSSG by 0.9ppt and 0.7ppt, respectively. Overall, the weaker SSSG performance was also influenced by the fluid economic situation and lower tourist numbers. Among various formats, the supermarket segment outperformed others, while the hypermarket segment showed the softest performance.
On the rental side, income contracted by 4.2% y/y in 3Q25, despite the improving occupancy rate, which stood at 90.9% at end-3Q25. Nevertheless, total rental income was pressured by temporary disruptions from ongoing renovations at 11 hypermarkets (out of 16 hypermarkets in 2025), lower benefits from changes in the tenant mix, and lower service income resulting from decreased utility costs.
Packaging sales remain soft due to lower glass bottle sales. BJC’s packaging business has demonstrated mixed performance. Total packaging sales decreased by 3.8% y/y, mostly dragged by the soft glass segment (following a declining selling price driven by lower raw material costs). In contrast, aluminium can sales increased y/y, driven by increasing selling prices stemming from an uptrend in aluminium costs.
Consumer performance remained firm. Consumer sales delivered 4.5% y/y sales growth in 3Q25, primarily led by steady growth in the food segment and positive momentum within the paper and personal care categories. We believe the appointments of new distributors, such as 4-PL and DSG, will further support sales. Nevertheless, overseas sales still declined, largely due to FX headwinds.
Healthcare & technical segment growth was softer. H&T segment sales (excluding Thai Scandic divestment) declined by 12% y/y, mainly due to a high base of medical equipment sales from government disbursement during 3Q24. Including the Thai Scandic divestment, sales dropped by 16% y/y.
Gross margin improved, but SG&A to sales increased. We observed continued gross margin expansion across all segments, mostly driven by an improved product mix, cost-saving programmes, and favourable raw material and packaging material costs. Nonetheless, the gross margin of Big C declined y/y following a less favourable product mix and price investments made during soft economic conditions.
SG&A expenses, in absolute terms, declined by 0.6% following the company’s attempts to control costs. Nevertheless, with underperforming sales in 3Q25, we observed that the SG&A to sales ratio increased by 70bps y/y to 21.6%. Net-net, the EBIT margin declined by 60bps y/y to 6.7% in 3Q25.
Outlook
Challenges expected to persist in 4Q25F. We expect quarterly earnings to peak in 4Q25 due to seasonality. Nonetheless, according to management guidance, Big C’s SSSG remained in negative territory (at low single to mid-single digit levels), while the benefits from stimulus measures, including “Co-Payment Plus”, have so far been largely limited. Thus, overall, we believe BJC’s earnings should likely continue to contract y/y, despite a strong rebound on a q/q basis.
Recommendation
Downgrade from BUY to HOLD with lower TP of THB20 (vs. THB24 previously). We cut our earnings forecast by 12%/13% for FY25F/FY26F to reflect lower total revenue and higher expenses, following a disappointing earnings performance in 3Q25. We anticipate that these headwinds will persist through 4Q25F, and the benefits from stimulus measures implemented so far have been limited.
Overall, we now assume Big C’s SSSG at -2%/+2% in FY25F/26F, vs. +0.5%/+2.5% previously. We expect other income to contract by 2% in FY25F instead of growing by 2%, with projected growth of 1.5% for FY26F (vs. 2% previously). Our DCF-based TP thus slides to THB20 (WACC of 8.4% and terminal growth rate of 1.75%). With limited upside to our new target price, we downgrade our call from BUY to HOLD.
Quarterly / Interim Income Statement (THBmn)
FY Dec (Btm) | 3Q24 | 4Q24 | 1Q25 | 2Q25 | 3Q25 | Chg. | Chg. |
Sales | 38,534 | 40,821 | 38,500 | 38,561 | 37,024 | -3.9% | -4.0% |
COGS | (30,923) | (32,237) | (30,659) | (30,786) | (29,649) | -4.1% | -3.7% |
Gross Profit | 7,610 | 8,584 | 7,841 | 7,775 | 7,375 | -3.1% | -5.1% |
SG&A exp. | (8,029) | (8,157) | (7,715) | (7,948) | (7,980) | -0.6% | 0.4% |
Other inc./exp. | 3,223 | 3,324 | 3,095 | 3,224 | 3,061 | -5.0% | -5.0% |
Equity income | 2 | (59) | 2 | 29 | 25 | 1143.9% | -15.3% |
EBIT | 2,806 | 3,692 | 3,223 | 3,080 | 2,481 | -11.6% | -19.5% |
Interesr income | 18 | 23 | 14 | 21 | 29 | 60.1% | 34.2% |
Interest exp. | (1,419) | (1,391) | (1,336) | (1,340) | (1,421) | 0.1% | 6.0% |
Pretax Profit | 1,403 | 2,383 | 1,898 | 1,732 | 1,064 | -24.2% | -38.6% |
Tax | (315) | (527) | (433) | (407) | (252) | -20.0% | -38.2% |
Minority Int. | (208) | (284) | (208) | (208) | (209) | 0.4% | 0.3% |
Net Profit | 701 | 1,645 | 1,091 | 990 | 637 | -9.2% | -35.7% |
Extraordinary gain/(loss) | (181) | 131 | (168) | (157) | 9 | -104.8% | -105.5% |
Norm Profit | 883 | 1,513 | 1,259 | 1,147 | 628 | -28.8% | -45.2% |
Margins (%) |
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Gross Margin | 19.7% | 21.0% | 20.4% | 20.2% | 19.9% | 0.2 | -0.2 |
SGA % Sales | 20.8% | 20.0% | 20.0% | 20.6% | 21.6% | 0.7 | 0.9 |
EBIT Margin | 7.3% | 9.0% | 8.4% | 8.0% | 6.7% | -0.6 | -1.3 |
Core Net Margin | 2.3% | 3.7% | 3.3% | 3.0% | 1.7% | -0.6 | -1.3 |
Effective tax rate | 22.5% | 21.6% | 22.9% | 23.9% | 24.2% | 1.8 | 0.3 |
Source: DBSVTH, Company
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