CP Axtra Shares Fall on $233 Million Plan for Thai Office-Retail Development

Dow Jones12-16 15:59

By Ben Otto

CP Axtra shares slid 17% after the Thai grocery retailer and wholesaler unveiled plans to invest more than $233 million in a mixed-use real-estate business in Bangkok.

Shares of the parent company of Lotus and Makro had fallen 19% to 28.25 baht in midday trade Monday, while shares of majority shareholder CP All slipped 7.6%. The benchmark Thai index was down 1.1%.

CP Axtra said Friday it plans to spend 7.97 billion baht, equivalent to $233.6 million, on a 95% stake in a mall-and-office project in the Thai capital known as the Happitat. It said the deal will "further complement" its mixed-use real-estate development business.

Citi analyst Preenapa Detchsri said the outlay will be 80% funded by loans, and CP Axtra expects additional investment of about 4 billion baht. She said she expects the deal to raise CP Axtra's interest expense by about 300 million baht to 400 million baht a year, cutting into the bank's 2025 earnings forecasts for CP Axtra and CP All by about 2% and 1%, respectively.

That said, "we do not have concerns about CP Axtra's financial leverage," given the company's relatively low debt levels currently, she wrote in a research note. But she cautioned that the "project may take more time to ramp up" amid likely intensifying competition for commercial property in Bangkok.

Citi kept a buy rating on CP Axtra, with a target price of 40.00 baht.

Write to Ben Otto at ben.otto@wsj.com

(END) Dow Jones Newswires

December 16, 2024 02:59 ET (07:59 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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