BANGKOK
Thailand’s largest retailer, Central Retail Corporation (CRC), plans to expand domestic online sales as well as its business in Vietnam, as the coronavirus outbreak slows economic growth at home, its top executive said February 27.
Shares of CRC, which went to market on February 20 in the country’s largest initial public offer (IPO), were trading 22 percent below its IPO price, against an 8 percent decline in the benchmark index.
“We went into a perfect storm, but [that] can be a perfect opportunity,” Chief Executive Yol Phokasub told Reuters, citing the virus outbreak, a prolonged drought and a delayed budget bill.
The Thai central bank has predicted that the coronavirus could cut growth to less than 2 percent this year amid a slowdown in exports and tourism. In 2019, the economy grew 2.4 percent.
Thailand confirmed three new coronavirus cases last week, and residents have been avoiding public places like department stores and movie theaters.
“These factors are creating new habits for consumers,” Yol said, expecting digital or online orders to contribute to 10 percent of sales, up from 5 percent last year.
This was helped by on-demand deliveries through a partnership with Singapore-based ride hailing startup Grab.
China’s 11 million arrivals accounted for 28 percent of Thailand’s tourism revenue last year. The government expects the number of Chinese tourists to fall by 2 million this year due to the coronavirus outbreak.
Still, if the outbreak is contained by April, the company could recover due to its flexibility, he said, but if its spread continues beyond June, there would a larger impact on growth.
The retailer, which has interests in food, fashion, electronics and furniture, was also concerned with how countries outside of China were handling the outbreak.
“The worry is if there is panic and other countries can’t contain it. We have to plan for this,” Yol said.
When asked about a share repurchase, he said that markets were “panicking and the 42 baht price is reasonable,” referring to the company’s price at IPO.
Thai companies have been repurchasing shares as prices have fallen in February.
Mall operator Central Pattana, also part of Central Group, have said it would buy back up to 5 billion baht worth of its shares.
Expansion Mode
Central Retail, owned by the billionaire Chirathivat family, plans to add 7-10 GO! supermarket stores a year in Vietnam over 10 years and transform the chain into a lifestyle mall.
“In Vietnam, we are growing the food business to draw in traffic and go beyond hypermarkets and also offer beauty, fashion products and space for tenants,” Yol said.
In five years, CRC expects to have 65 percent of its revenue from Thailand, 25 percent from Vietnam and the rest from Italy, not including acquisitions, Yol said.
Currently, Thailand accounts for 75 percent of revenue, with Vietnam making up 17 percent.
