Siam Makro (MAKR.BK/MAKRO TB)*: Cash and carry king

Siam Makro (MAKR.BK/MAKRO TB)*: Cash and carry king

Reinitiate coverage with Outperform rating and target price of Bt308.00
We reinitiate coverage on MAKRO with an Outperform rating and a DCF-based target price of Bt308.00 (WACC of 11.1% and terminal growth rate of 3%). We like MAKRO’s unrivaled leadership in cash and carry business, strong balance sheet and upbeat earnings outlook. It is also well positioned to benefit from continued growth in i) urbanization and provincial income, ii) popularity of prepared food, and iii) Thai tourism industry. Trading at 19x 2012 PE against expected EPS growth of 28.9%, the company is poised to deliver above-average earnings growth at below-average PE, compared to consumer peers.