HMPRO Earnings expected to grow 10% in 3Q09

Home Product Center (HMPRO) 3Q09 performance is likely to remain solid with expected earnings growth of 10% yoy to Bt253mn. Sales are projected to rise 7% yoy based on estimated same-store-sales growth of 2% and coupled with the contributions from two new stores opened in 1H09 in Phuket and Khao Yai, with a total sales area of 10,000 sqm. The Increase in rental space from the Phuket store and the expansion of the Hua Hin outlet will enhance the company rental income. We expect the gross margin to stand at the same level of last year at 24.1%. The narrowing margin from sales promotions and marketing campaigns will be offset by rising levels of high-margin house branded products from around 11% in 3Q08 to almost 14% of sales in 3Q09. Meanwhile, costs have been well managed.