Robinson Department Store (ROBI.BK/ROBINS TB)*: Provincial powerhouse

We reinitiate coverage on ROBINS with a rating of Outperform. Our target price of Bt50.00 is
based on DCF valuation, with WACC of 11.5% and terminal growth rate of 3%. This places
the stock at 27.7x 2012 PE (just below its one-year mean plus 1.5SD), falling to 22.8x in 2013
(marginally below its one-year mean). ROBINS is Thailand’s top department store operator in
terms of number of branches, commanding an overall market share of 49%. Looking by
markets, the company now operates nine branches in Greater Bangkok (including the
soon-to-be-opened Rama IX branch) and another 16 in other provinces, translating into
market shares of 30% and 76%, respectively. In our view, the provincial market looks
remarkably attractive on the back of i) lower penetration rate (Greater Bangkok’s department
store penetration rate is around 385K people per store vs. upcountry’s 2.6mn), ii) less direct
competition (besides ROBINS, only Central Department Store and The Mall have presence in
the provincial field), iii) urbanization (Thailand’s urban population is expected to almost
double from 23.1mn in 2010 to 44mn by 2050) and iv) rising provincial discretionary income
(GDP per capita of the provincial market has been growing at 2005-2010 CAGR of 7.7% a
faster pace than Greater Bangkok’s 5.2%).

KGI Securities (Thailand)