SET-listed retail company CP All Plc has earmarked 14 billion baht to expand its convenience and cash-and-carry store operations this year on the back of economic recovery and high consumer spending power.
Of the total budget, 9 billion baht will go to its own 7-Eleven convenience store expansion and the remaining 5 billion to its subsidiary Siam Makro Plc, which operates Makro cash-and-carry stores.
CP All plans to open 600 new convenience stores and improve its existing outlets, while Siam Makro will open 10 new Makro branches.
The combined 14-billion-baht budget does not include a new distribution centre and investment in ready-to-eat food production.
The move will be funded by CP All's cash flow.
"We're still moving forward on our expansion plan to cash in on opportunities in the retail business, which has huge demand nationwide," said Kriengchai Boonpoapichart, head of finance and investor relations at CP All.
If GDP growth comes in at 4% this year, the retail sector is expected to rise by three times' GDP growth, as consumer goods are used daily by people.
Last year, CP All posted a net profit of 21 billion baht, up by 39.8% from 2013, on consolidated revenue of 371 billion, up by 30%.
Contributing to the sharp growth was the acquisition of Siam Makro, which contributed 142 billion baht in revenue.
The growth of 7-Eleven alone reached 9.4% with almost 700 new branches opened, bringing the total number of outlets to 8,127 at the end of last year.
CP All yesterday opened subscription for the fifth tranche of debentures worth 18 billion baht.
The two-year debentures offer a 3.55% coupon rate and the five-year debentures 4.1%.
The new debentures will significantly reduce its interest expenses stemming from bridging loans of 180 billion baht, which carry interest of more than 5% per year on average, Mr Kriengchai said.
CP All will have a call option on the whole or part of the five-year tenor to enable flexibility on future financing.
Earlier, its four tranches of debentures received overwhelming interest from both institutional and retail investors, and the company used the raised funds to pay interest expenses and repay loans. Currently, its US-denominated bridging loans face higher risks from currency exchange fluctuations.
CP All targets revenue growth of 10% this year, driven by store expansion and a revival in consumer spending.
Same-store sales growth is expected at 3-5% this year.
CPALL shares closed yesterday on the SET at 40.50 baht, unchanged, in trade worth 214 million baht.