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Asia300

CP All's Q2 profit up 10% on store expansion

Thai 7-Eleven operator defies same-store sales decline, opening 700 new outlets

A 7-Eleven store in Bangkok

BANGKOK -- Thailand's CP All, the operator of the country's 7-Eleven stores, saw negative growth in same-store sales for the April-June period but posted gains in both consolidated revenue and net profit thanks to its ongoing aggressive store expansion.

According to earnings reports filed after Thursday's market close, net profit came in at 4.647 billion baht ($139 million) for the second quarter, up 10 percent on the year, on revenue of 120.652 billion baht, an increase of 5.3 percent.

Convenience store sales grew 5.7 percent to 69.377 billion baht, while same store sales contracted by 1 percent.

Thailand's economy is still on a course of recovery as purchasing power remains weak, which has weighed on CP All's core business.

Other factors, such as an unusually heavy rainy season and a government tax exemption implemented to stimulate spending in the same period last year, should also be taken into account, an analyst at Capital Nomura Securities said.

Aggressive store expansion is set to keep the company's top line growing.

Thailand boasts the world's second largest network of 7-Elevens. The number of stores topped the 10,000 mark in the second quarter to reach 10,007 as of the end of June, an addition of more than 700 stores over the past year.

The company is forecasting 13,000 stores by 2021, bringing it an inch closer to the 19,588-store network of Seven-Eleven Japan.

Market conditions are expected to improve in the second half of the year.

The government is set to approve a 46-billion-baht aid package for low-income earners that will come into force in October. The package includes free public transport rides and subsidies for utility bills.

"The mood for spending is expected to be better," the analyst at Capital Nomura Securities said.

CP All shares were trading at 61.5 baht on Friday, up 0.8 percent on Thursday's close.

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