HOLD (Initial Coverage) Big C Supercenter Pcl. Thailand Equities. Commerce Thursday, November 03, Glory days are over. Target Price Bt123.

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1 Commerce Thursday, November 03, 2011 Big C Supercenter Pcl BIGC.BK/BIGC TB HOLD (Initial Coverage) Glory days are over BIGC is the second-largest retail hypermarket chain operator in Thailand (after Tesco) with 117 stores including those of Carrefour. After meeting with management, we initiate coverage with a HOLD rating to a target price of Bt123/share based on unclear long-term growth drivers and a saturated industry with cut-throat competition. Unclear long-term growth drivers. With the Carrefour acquisition late last year, BIGC expanded its footprint by 42 stores and is closing in on the market leaders Tesco. We believe BIGC is operating in a maturing industry where there is cut-throat competition from Tesco and Makro, which indeed triggered BIGC to cut its target store openings to two from four to five stores per year. BIGC s new growth strategy to launch multi-format stores in the form of convenience, premium and cash & carry stores faces fierce competition from established vendors, so we have a neutral outlook on this. Its decision to expand into Laos and Cambodia is still in the very early stages for us to be bullish on it. But it confirms our view that BIGC needs to expand internationally given maturing domestic growth. Synergies already priced in. BIGC is expected to realize Bt1.2bn in synergies over three years. Bt400m was already realized in 1H11 and another Bt200m is expected in 2H11. Synergies can be seen by the increase in its EBITDA margin from 9.3% in 1H10 to 10.0% in 1H11. But we believe the positive news from the synergies has already been factored into the price as evidenced by the sharp rise in the stock price (BIGC has outperformed the SET Index by 20.9% YTD). Potential catalysts. We believe that rental income could stimulate earnings next year. BIGC operates a dual property model with rental income accounting for 40% of its EBIT. In our view, the acquisition of Carrefour will benefit BIGC as former Carrefour stores enjoy higher rental income as a percentage of sales. The new Alcudia concept should boost rental income too. Risks. Downside risks are lower-than-expected synergies, weakening consumer demand and faster-than-expected implementation of the Thai Retail & Wholesale Act limiting store expansions. Better samestore sales growth (SSSG) and fatter margins are upside risk. Fairly valued. Our TP of Bt123/share implies a target 2012 P/E of 21.1x. We apply only a 2.0% terminal growth rate to DCF reflecting the limited growth opportunities in the industry. BIGC s decision to raise Bt25bn by issuing between 220m and 350m shares will result in 22% to 30% dilution. However, we assume an increase of 350m shares with 30% dilution, thus eating up all net profit growth this year. We value BIGC at Bt86/share after dilution and for now we maintain a HOLD recommendation until there is a clear visibility on the success of it multi store and on the magnitude of dilution (announced in Nov). Share Price Bt103.5 EVENT Initial Coverage Target Price Bt123.0 LATEST KEY DATA SET close No. of shares (m) Market cap (Btm/US$m) 82,945 12M daily turnover ( 000 shares) week Hi/Lo (Bt) 136.0/64.50 Beta 0.88 PEG FY11-12F (x) 2.4 ROE FY11F (%) 8.1 ROA FY11F (%) 3.6 P/BV FY11F (x) 2.5 SHARE PERFORMANCE (%) 1M 3M YTD Absolute 0.0% -15.9% 14.0% Relative to SET -10.0% -0.7% 22.0% MAJOR SHAREHOLDERS (%) Geant International B.V Saowanee Holding Free float (est.) Foreign limit PRICE CHART Bt /09 2/09 4/09 6/09 8/09 10/09 12/09 2/10 3/10 6/10 7/10 9/10 11/10 1/11 3/11 5/11 7/11 9/11 10/11 Rattana Leenutaphong, Suthep A. Singh, Assistant Analyst (662) rattanal@ivglobal.co.th BIGC 1 of 12 BIGC

2 Investment Summary FY 31 Dec F 2012F 2013F Sales (Btm) 67,292 68,058 70, , , ,102 Change (%) Net profit (Btm) 2,852 2,868 2,886 3,846 4,661 5,203 Change (%) EPS (Bt, fully diluted) Change (%) (7.2) P/E (x) DPS (Bt) Yield (%) EV/EBITDA (x) BVPS (Bt) P/BV (x) ROE (%) ROA (%) Net D/E ratio (%) 9.3 Net cash Net cash Strong balance sheet Alcudia concept could boost earnings Valuations & Recommendation Big C Supercenter (BIGC) has a strong balance sheet with great working capital management its number of days payable to suppliers is higher than for other retailers like CP All Pcl (CPALL). BIGC is also known for its ability to fatten its margin and, with the recent acquisition of Carrefour and it closing on market leader Tesco, it now has higher purchasing power with its suppliers. Nevertheless, we believe the price BIGC paid for Carrefour is excessive (at 13x EV/ EBITDA) and the synergies that the company will bring in are already reflected in the stock price. Neither do we see any catalysts that will drive the stock from next year onwards. One possible catalyst is its expanding real estate portfolio which will benefit from the acquisition of Carrefour as ex-carrefour stores have better rental income as a percentage of sales and a greater presence in Bangkok. Also, management is developing the Alcudia concept for its stores where the back office will be reduced with sales areas of the hypermarkets optimized and allocated to the shopping malls. The concept also involves adding new tenants with attractive brands to boost traffic and develop real shopping destinations by adding an IT center for mobile phones and computers. Basically, BIGC initiated the concept to increase its leasable area and raise its rental income. We are positive on this strategy as BIGC has historically had a high occupancy rate at 96% so it shouldn t face any difficulties in finding tenants and generating high rental income. Poor SSSG rate compared With the belief that the existing hypermarket business is near saturation to peers with opportunities to open large-scale stores limited, the focus has shifted to the growth of existing stores. The sales growth of existing stores, or the same-store sales growth (SSSG) rate, has been disappointing in the past and in 1H11. During 2002 to 2009, SSSG averaged 2.4% per annum and in 2010 it was at 3% which is significantly lower than Siam Makro s (MAKRO) SSSG of 6.9%. During 1H11, BIGC s SSSG fell from 2% in 1Q11 to slightly negative in 2Q11 as the company lost some market share to Tesco. Nevertheless, we assume a low 2.5% SSSG rate in 2012 which is way below rivals in the sector like Home Product Center (HMPRO) and CPALL. BIGC s SSSG is expected to be near to 2.5% at the end of the year (from 2% in 1H11) due to seasonal factors, aggressive joint BIGC 2 of 12

3 advertising by BIGC and Carrefour allowing consumers to use cash discount vouchers at all their stores and also due to the BIGC festival and anniversary in 2H11. Fairly valued with a target price of Bt123/share Using discounted cash flow (DCF) methodology with a WACC of 7.5% and a terminal growth rate of 2.0% after 2015, we value BIGC at Bt123/share (before dilution). BIGC is now trading at 2012 P/E of 25.6x (most expensive in the sector) and our TP imply a 2012 target P/E of 21.1x. Based on the assumption of 30% dilution (preliminary number) from the capital increase in November, we estimate EPS will decline by 7.2%. The proceeds will be used to repay debts and fund its future expansion. We initiate coverage on BIGC with a HOLD rating reflecting the uncertainty over its multi-store format success and on the magnitude of dilution. If BIGC can prove to be competitive in the segments it plans to enter aggressively, we will revise our earnings and target price accordingly. Sector comparison Company P/E (x) 2011F P/E (x) 2012F EV/ EBITDA (x) 2011F EV/ EBITDA (x) 2012F P/BV (x) 2011F PEG (x) 2012F EPS growth (%) 2011F EPS growth (%) 2012F BIGC CPALL GLOBAL HMPRO LOXLEY MAKRO ROBINS Average Source: Bloomberg and IVG estimate DCF assumptions Risk free rate 3.87% Adjusted Beta 0.88 Market Risk Premium 8.13% Cost of Equity 11.0% Cost of Debt 4.0% WACC 7.55% Source: Thai BMA, Bloomberg, IVG estimates 4Q normally strong due to seasonal factors New stores and new businesses boost growth 2011 EPS growth diluted. We estimate BIGC will book earnings of Bt3.85bn in 2011, up 17.2% YoY. Its 9M11 profit accounts for 74.3% of our full-year estimate, with Bt1bn in net profit expected to be booked in 4Q (+23.4% QoQ and +24.8% YoY). 4Q11 should be strong on seasonal factors i.e. the arrival of the holiday season and big promotional campaigns held at year-end along with continued synergy benefits from the integration of Carrefour. However, EPS growth will be diluted by an estimated 30%. Retail sales to be slim in 2012 and earnings to be boosted by rental income and tax savings Tax cut, rental income to boost Sales are estimated to grow by 4.8% to Bt112.8bn in 2012 bolstered by SSSG of 2.5% and contribution from the multi-store format. We project rental income to rise by 6.8% in 2012 with the positive outlook for the Alcudia concept and the benefits received from the integration of Carrefour (Carrefour s standalone stores generated higher rental income as a percentage of sales than BIGC s historically). EBITDA margin should trend up from 10.1% in 2011 to BIGC 3 of 12

4 More room to grow via private brands BIGC s rental income is supported by the Alcudia concept and acquisition of Carrefour 22% to 30% dilution of EPS 10.2% in 2012 with stronger bargaining power. We forecast net profit to grow by 21% YoY, bolstered by the new government s policy of cutting the tax rate to 23% and stricter controls over SG&A expenses with more sensible promotion campaigns. We believe the majority of earnings growth in 2012 will be sourced from tax savings and growth from rental income. Private brands offer growth potential. BIGC currently has three private brand segments. Each segment is targeted at a different type of consumer. The Happy Baht brand offers basic quality goods at cheap prices for price-sensitive consumers. The BIGC brand offers average quality mainstream products to meet consumers daily needs. BIGC Delight, meanwhile, targets high-end consumers and offers margin-driven brands. In spite of offering around 1,600 stock-keeping units (SKUs) of house brands to consumers, private brands only account for 3% of total sales. Private brand items generate significantly higher margins than other suppliers brands and BIGC has lost out on the chance to gain extra returns in the past. It plans to add 122 new SKUs to its existing private brands this year to seize the opportunity of fattening its margin. By way of comparison with its peers, Tesco s sales of private brands as a percentage of the total in 2010 were higher at 11% with 2,000 SKUs. Earnings catalyst from property assets Due to its dual retail property model, BIGC generates rental income equivalent to 40% of EBIT which shows the importance of growth in rental income. The company operates approximately 600,000 sqm of rental space (up significantly due to the consolidation of 42 shopping centers) and this is expected to reach 775,334 sqm by year-end. With the development of the Alcudia concept, BIGC aims to increase its rental space and optimize its retail space without hurting sales. We feel quite positive about this strategy as currently BIGC stores have sellable area that is not optimized and the back office eats up a lot of place which could be offered to tenants. Historically, Carrefour s rental income has averaged 7.2% of total revenues, higher than BIGC s 6.3%. With the acquisition of Carrefour, there is potential for BIGC to improve its productivity in the shopping center segment and also benefit from the Alcudia concept. Raising capital to repay debt and fund growth Along with its 3Q11 results, BIGC announced to the market a rights issue of between 220m to 350m shares worth up to Bt25bn. Casino Group, BIGC s biggest shareholder, has shown a strong interest in supporting the capital call. However, any unsubscribed shares will be allocated via a private placement. We conservatively assume BIGC will issue 350m new shares at Bt71.4/share, thus raising Bt25bn. EPS dilution will be around 22% to 30% depending on the price set after the EGM. We assume 30%. The proceeds will be used to partially repay the remaining Bt36.5bn debt incurred from the acquisition of Carrefour. BIGC says it will use the capital raised to fund its expansion into different store formats (capex of Bt45bn over four years); however the real intention of the company appears to be to lessen its accelerating interest expenses. As of 3Q11, BIGC s net debt/ebitda reached 3.0x and it plans to reduce it to 1.0x with the money raised. The decision to repay debt was triggered BIGC 4 of 12

5 Targets to reduce net debt/ebitda to 1.0x by rising interest rates in the past few months and the overall upward rate trend. BIGC also wants to achieve investment-grade rating for its longterm debt issues. A high net debt/ebitda suggests the company s ability to fund its expansion plans in the future would be limited. Details Issuer BIG C Supercenter Pcl ( BIG C ) Offer structure Right issue and private placement of unsubscribed rights Outstanding shares 801,386,574 shares (pre-offering) Size Up to Bt25bn Number of shares issued 220 to 350m new ordinary shares (or up to existing shares for one new share) Issue price To be announced after EGM Private placement price To be determined by book building (not lower than rights issue price) Largest shareholder Casino said it intends to subscribe to the rights issue Use of proceed To repay acquisition debt Approval process EGM to 17 November, 2011 Source: Company data Date October 19 November 3 November 17 December End December Source: Company data Aggressively expanding smaller store version Stiff competition from CPALL Details Board meeting approved the transaction Record date for EGM Extraordinary General Shareholders Meeting (EGM) Subscription and payment period (exact dates to be set by EGM) Private placement of any unsubscribed right shares Trading of new shares commences Developing a multi-store format Management targets to aggressively expand a smaller version of its store from 2012 onwards amid the maturing growth of its hypermarket chain. It plans to increase the number of its Mini BIGC stores (convenience store with a sellable area of 160 sqm focusing mainly on fresh and dry groceries) from 58 in 2011 to 950 in 2012 and BIGC Market stores (supermarket with sellable area of 750 to 2,000 sqm selling a full range of products); and open 240 Pure stores (pharmacy with sellable area of 65 sqm). The company is accelerating the deployment of Extra Concept where 15 Carrefour Premium stores will be converted to BIGC Extra stores targeting high-end consumers. These stores will feature a wide range of imported goods especially from the Casino group. BIGC has also opened one of its stores in Cash & Carry format. To be conservative, we only incorporate 50% of the expansion plan into our model to reflect the uncertainty over the timing of the store openings and unclear visibility about whether the multi-format strategy will prove to be a success. The expansion plan could be changed over time based on the external environment, the success of previously opened stores and the company s new strategies. Mini BIGC stores will face fierce competition as CPALL s 7-Eleven controls 70% of the Thai convenience store market. Undoubtedly, CPALL has a better business model than BIGC. Therefore, it looks like quite a challenging task for BIGC to gain market share given CPALL s strong foothold. BIGC s previous attempt to open convenience stores failed. BIGC 5 of 12

6 Opportunity to grow with BIGC Market stores Awarded a license to operate in Laos Casino group operates in Vietnam Affected area accounts for 2.3% of total sellable area Synergies to exceed Bt1.2bn estimated earlier BIGC Market stores are basically an attempt to capture consumers who live on the outskirts of Bangkok where there are no hypermarkets. We are positive on this move because opening this kind of store requires considerably less capex. BIGC Market stores require investment of Bt130m-Bt150m while BIGC hypermarkets need up to Bt600m. We believe that BIGC Market stores will better serve consumers in the provinces where houses are scattered across large areas. Opening smallscale stores in many locations should prove to be a better strategy than launching large ones in only a few locations. Overseas expansion At the overseas level, the company has been granted a 30-year concession to operate its business in Laos. BIGC has only reached the preliminary requirement stage to conduct a feasibility study and the final decision has not yet been made. Neither has any construction work begun. In our view, Laos could prove to be a successful investment due to a dearth of foreign retailers and the fact that people from Laos often cross the border and shop in the northeastern part of Thailand. However, it is too early to incorporate this into our model and even if BIGC does open a 2,000 sqm store, it will only have a marginal impact until BIGC sees huge potential and goes all out to open more stores there. The Casino group, the major shareholder of BIGC, has investments in Vietnam. The company only allows BIGC to use its trademark and BIGC receives a royalty fee for the license granted under a Trademark Licensing Agreement. Impact of floods So far, two hypermarket stores have been affected (Nava Nakorn and Bangyai branches) by floods and closed. Of its small stores (Mini BIGCs), six branches in Thippiman, Bang Buathong, Ladkrabang, Nava Nakorn, Khlongluang and Thanyaburi have been temporarily shut. Three distribution centers have also closed but BIGC has been working with its suppliers to deliver its goods directly to the stores, bypassing the distribution centers (DC). However, these branches account for just 2.3% of total sellable area which is negligible. BIGC also has insurance in place to cover any damage to its assets. The slowdown in sales in flooded areas should be outweighed by soaring sales at other branches where people have been stocking up on necessity items. Integration benefits Synergy benefits to BIGC could exceed the Bt1.2bn estimated earlier with Bt400m of synergies already realized in 1H11 and another Bt200m expected in 2H11. Synergies are expected to come via a combination of bargaining power with suppliers, savings on logistics expenses and reduced costs from sharing resources. Synergies from integration can be seen by the increase in its EBITDA margin from 9.3% in 1H10 to 10.0% in 1H11. Historically, Carrefour s underlying profitability has been inferior to BIGC s but recent 1H11 reports confirm that both companies margins are on a par and synergies could be more than the estimated Bt1.2bn. So far, BIGC 6 of 12

7 management has completed the first round of trade and credit term alignment negotiations with common suppliers of BIGC and Carrefour. Now, BIGC will undertake the next round of talks with those suppliers not serving both companies. Beside purchasing synergies, there should be scale synergies too. Integration of software and IT will lead to optimization and cost savings. Beside, BIGC will also develop its own distribution centers by spending Bt3bn to ensure better control over the supply chain and logistics to support its aggressive store expansion in the coming years. Synergies priced in The chart above shows that BIGC has outperformed the SET Index since the end of October to date by 20.9%. The stock price rose sharply during the Carrefour acquisition period. We believe the market is forward looking and the acquisition benefits have already been factored into the price. Second-largest share market Business profile Founded in 1993, Big C Supercenter Pcl (BIGC) is one of Thailand s leading consumer retail operators. The company offers a wide variety of goods in modern retail outlets at very competitive prices. Operating under the slogan of More Than Just Low Prices, BIGC is committed to delivering maximum value to customers through a combination of low prices, a wide selection of goods and services, clean and efficient shopping environments and outstanding service. At present, Big C has more than 100,000 items on offer to all customers needs along with various sales promotional programs. Big C s merchandise is divided into five basic categories: Fresh food: meats, seafood, fresh fruits and vegetables (both ready to cook and ready to eat), frozen food, baked goods, and various herbs and spices. Dry food: seasonings and condiments, beverages (both soft drinks and liquor), snack foods, personal items, cleaning suppliers, and pet food and accessories. BIGC 7 of 12

8 Clothing and Accessories: men s, women s, children s and infant clothing, and shoes as well as cosmetics. Electrical Appliances: a wide range of electrical appliances including white goods, kitchen appliances, home entertainment equipment, tapes, CDs, plus automobile and motorcycle accessories, and home improvement and maintenance tools and supplies. Home Decor and Accessories: furniture, kitchenware, plastic storage items and utensils, decorative items, sporting goods and toys. The contribution from each category is as follows: Source: Company The Big C Town Center offers rental space both inside and outside a Big C Supercenter for vendors who sell various kinds of non-competing merchandise. This allows BIGC to have a wide range of products and services that are in line with the company s strategy of providing a onestop shopping experience for customers. The operators that lease space at Big C Town Centers fall into five primary categories: Source: Company BIGC 8 of 12

9 Region Number of Stores Northern province 11 Central & Western Province 12 Bangkok and Surroundings 57 North Eastern Province 14 Eastern Province 12 Southern Province 11 Source: Company Intensified competition but opportunities available upcountry SWOT Analysis Strength Stronger bargaining power with the acquisition of Carrefour. BIGC is closing in on the market leader Tesco. Strong balance sheet with good working capital management Operates a dual retail property model with decent income generated from offering retail space for rent to tenants. Historically, it s had a high occupancy rate of 96%. Extensive store coverage both upcountry and in Bangkok. Better-than-expected synergies from the integration of BIGC and Carrefour stores. Weakness Might have paid too much to acquire Carrefour. High net debt/ebitda of 3.0x Opportunity Opportunities to expand into the provinces where the market is relatively untapped. Expansion into multi-format stores in the form of hypermarkets, market stores, Mini BIGCs and Pure health & pharmacy stores could prove to be a new growth driver for BIGC. Threat Economic slowdown. Political unrest and natural disasters. Thai Retail & Wholesale Act limiting the expansion of new stores. Intensified competition in all store format segments (hypermarket, convenience store, supermarket, etc). BIGC 9 of 12

10 Profit & Loss FY 31 Dec (Btm) F 2012F 2013F Sales and service revenue 67,292 68,058 70, , , ,102 Cost of sales (62,219) (63,796) (63,793) (92,291) (96,566) (102,190) Grosss profit 5,073 4,262 6,443 15,400 16,245 16,913 Rental + other income 10,974 12,530 13,616 10,894 11,563 12,438 SG&A (12,073) (12,624) (15,674) (19,277) (20,757) (22,296) EBIT 3,974 4,168 4,385 7,017 7,051 7,054 Interest expenses (149) (111) (6) (1,500) (968) (518) Profit after Interest 3,825 4,057 4,379 5,517 6,084 6,537 Tax (957) (1,173) (1,084) (1,655) (1,399) (1,307) Profit before minority 2,868 2,884 3,295 3,862 4,684 5,229 Non-recurring items - - (392) Minority interest (16) (16) (17) (15) (23) (26) Net profit 2,852 2,868 2,886 3,846 4,661 5,203 Ratio analysis F 2012F 2013F Per share EPS (Bt) DPS (Bt) BVPS (Bt) EV (Bt) Valuation P/E (x) P/BV (x) EV/EBITDA Dividend yield (%) Profitability ratio Gross margin (%) EBIT margin (%) EBITDA margin (%) Net profit margin (%) ROE (%) ROA (%) Liquidity ratio Current ratio (x) Quick ratio (x) Leverage ratio Total D/E ratio (%) 9.3 Net cash Net cash Key assumptions (%) 2011F 2012F 2013F Same-store-sales growth Sales growth YoY Gross margin Rental income as % of revenues SG&A as % of sales EBIT margin EBITDA margin Effective tax rate Net margin Net profit growth YoY BIGC 10 of 12

11 Balance sheet FY Dec 31 (Btm) F 2012F 2013F Current assets Cash and cash equivalents 1,382 1,951 5,132 29,713 19,970 12,902 Account receivable Inventories 5,171 5,785 5,627 7,712 8,069 8,539 Other current assets 1,814 1,792 2,146 2,950 3,090 3,262 Total current assets 8,442 9,596 13,000 40,511 31,271 24,854 Non-current assets Property, plant and equipment 24,873 23,145 22,618 37,021 39,884 40,346 Leasehold Rights 3,498 3,408 3,387 3,369 3,467 3,504 Goodwill ,430 27,161 27,161 Other non-current asset Total non-current assets 28,890 27,102 26,673 68,135 70,862 71,403 Total assets 37,332 36,698 39, , ,134 96,257 Liabilities and shareholders' equity Current liabilities Overdraft +ST debts 3, , Trade accounts payable 12,319 13,308 14,004 17,599 18,414 19,486 Current portion of unearned leasehold rights Other current liabilities 3,350 3,361 4,021 5,656 5,918 6,262 Total current liabilities 18,687 16,683 18,036 59,765 24,342 25,759 Non-current liabilities LT loan ,500 16,500 Unearned leasehold rights - net of current portion Other non-current liability 1, ,020 1,471 1,539 1,630 Total non-current liabilities 1,274 1,082 1,184 1,624 28,181 18,261 Total liabilities 19,961 17,765 19,220 61,389 52,524 44,020 Shareholders' equity Paid Up capital 8,014 8,014 8,014 11,514 11,514 11,514 Premium 2,246 2,246 2,246 23,746 23,746 23,746 Other Retained earnings - Reserve Retained earnings - Unappropriate 6,415 7,837 9,135 11,058 13,389 15,990 Minority interest Total shareholders' equity 17,371 18,933 20,453 47,256 49,610 52,237 Total liabilities and equity 37,332 36,698 39, , ,134 96,257 Cash flow statement FY Dec 31 (Btm) F 2012F 2013F Operating cash flows; Net income 3,825 4,057 3,988 5,517 6,084 6,537 Depreciation and amortization 2,467 2,700 2,540 3,874 4,469 4,931 Income Tax (1,104) (993) (1,262) (1,655) (1,399) (1,307) Others ,515 3, Total operating cash flows 5,206 6,051 6,781 11,433 9,994 10,938 Investing cash flows; Capex (5,107) (1,019) (1,780) (9,000) (7,000) (5,000) Intangibles (167) (192) (236) (431) (431) (431) Investments (37,013) - - Others Total investing cash flows (5,274) (1,160) (2,014) (46,444) (7,431) (5,431) Financing cash flows; Debts 965 (3,000) - 36,500 (10,000) (10,000) Capital increase , Dividends (1,250) (1,306) (1,571) (1,923) (2,330) (2,602) Minority (16) (16) (15) Total financing cash flows (301) (4,322) (1,586) 59,592 (12,307) (12,575) Net cash flow (369) 569 3,181 24,581 (9,743) (7,068) BIGC 11 of 12

12 Quarterly earnings (Btm) 3Q11 3Q10 % YoY 2Q11 % QoQ 9M11 9M10 % YoY Sales 25,348 16, ,436 (4.1) Gross profit 3,543 2, ,833 (7.6) 10,939 6, Rental & Other income 2,445 1, ,755 (11.3) 7,598 4, SG&A 4,540 2, ,647 (2.3) 13,600 8, EBIT 1, ,941 (25.4) 4,937 2, Interest expense (406) (2) >10,000 (330) 23.0 (937) (5) >10,000, Pre-tax profit 1, ,611 (35.3) 4,000 2, Income tax (227) (245) (7.3) (516) (56.0) (1,145) (868) 31.9 Net profit ,095 (25.6) 2,856 2, EPS ( Bt) (25.6) Financial ratios (%) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 Sales growth YoY Sales growth QoQ (4.8) 9.5 (9.7) (4.1) Gross margin SG&A as % of sales (16.8) (15.5) (16.9) (16.5) (17.8) (17.6) (17.9) EBIT margin Net margin Net profit growth YoY Q11 net profit slipped by 26% QoQ to Bt811m due to the seasonal impact. However, earnings did surge 43% YoY, thanks to strong sales growth of 53% YoY. The consolidation of Carrefour has resulted in 42 additional stores while BIGC has opened four new stores since 4Q10. The successful promotion campaign and BIGC festival boosted SSSG while the Carrefour integration has enhanced trade terms with suppliers, widening gross margin from 12.2% in 3Q10 to 14.0%. Rental income rose a sharp 78% YoY on the 34% increase in rental space thanks to the grand opening of BIGC Rajadamri in April that was closed last year due to the political unrest. The effective tax rate fell from 30% to 22% given the tax exemption during the political turmoil. Corporate Governance Report of Thai listed companies CG report: (very good) The disclosure of the survey result of the Thai Institute of Directors Association ( IOD ) regarding corporate government is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the Market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. I V Global Securities Plc. (IVG) does not confirm nor certify the accuracy of such survey result. 18 th Floor, Mercury Tower, 540 Ploenchit Road, Lumpini, Pathumwan, Bangkok Telephone: +66 (0) Fax: +66 (0) The opinions and information contained herein are based upon sources believed to be reliable but their accuracy, completeness or correctness are not guaranteed. This information is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered herein by this report. I V Global Securities Plc. ( IVG ) accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or its content. BIGC 12 of 12