MK Restaurant Group Public Company Limited

KGI Securities (Thailand) said heavy rain covered Bangkok and its vicinity from September 25, causing flash floods in many areas, with the overall situation beginning to improve slowly from September 27, and it views the impact on the economy and the market as still limited. On the positive side, consumer staples groups such as BJC, CPALL and CPAXT are likely to benefit from stockpiling of fresh food, dry food and necessities. Meanwhile, home and building repair groups such as HMPRO, which has 50% of all its branches in the central region, and TASCO, as well as DOHOME and GLOBAL, are likely to benefit from the positive market conditions as well. However, KGI views this benefit as unlikely to be significant enough to raise its earnings forecasts for the stocks under coverage. On the negative side, the floods may affect customer numbers and goods transport flows for commercial property such as CPN, hotel groups and restaurants, with AWC having the highest concentration in Bangkok and therefore possibly facing the heaviest short-term impact. But if hotel stock prices pull back because of the floods, that would be a buying opportunity, since the main picture is still that revenue per available room is improving and the high travel season is approaching. As for restaurant stocks such as AU, M and MAGURO, they may be somewhat affected, with MAGURO temporarily closing all 6 of its branches, accounting for about 11% of the company's total 61 branches.

Kasikorn Securities maintains a negative view on Thailand's restaurant sector, stating that economic stimulus measures continue to pressure the five SET-listed restaurant operators: M, ZEN, AU, OKJ, and MAGURO. This follows the Cabinet's approval of the Thai Chai Thai Plus Phase 2 program with a budget of 42.7 billion baht, extending the 60:40 co-payment scheme for another two months, from October 1 to November 30, 2026. Under the scheme, the government covers 60% of eligible spending, capped at 200 baht per person per day and no more than 1,000 baht per person over the two-month period, compared with 1,000 baht per month in Phase 1. Participants must confirm their eligibility via the Paotang application between October 1 and 15, and state welfare cardholders with eligibility will receive an additional 700 baht in October. The research team noted that the seven previous co-payment rounds failed to improve same-store sales growth, or SSSG, for listed restaurants. In the fourth quarter of 2025, the average SSSG of the five operators fell 9.6% even as private consumption grew 3.3%, and declined 8.2% in the second quarter of 2026 while private consumption grew 1.9%. It expects SSSG to remain negative in the third quarter of 2026 based on recent discussions with management. On investment recommendations, the research team maintains a negative view on the sector but prefers M over ZEN due to its clearer strategy and more evident earnings recovery outlook. M trades at a 2026 PER of 19.1 times versus a three-year core EPS CAGR of 19.4% and offers a dividend yield of 5.2%, while ZEN trades at a PER of 27.0 times versus a three-year core EPS CAGR of 20.8% and offers a dividend yield of 1.9%. It maintains a hold rating on both stocks, with a target price of 19.9 baht for M and 5.6 baht for ZEN.

Bualuang Securities said the earnings outlook for M in the third quarter of 2026 is not yet the start of a full recovery, with same-store sales in July and August at -1% year on year, split between MK at -1%, Yayoi at -3%, and Laem Charoen Seafood flat. September also looks set to remain negative compared with a year earlier, especially MK Suki, given its high base last year. Although total revenue is supported by the expansion of Bonus Suki, gross margin is likely to slip slightly from the previous quarter because of the higher share of revenue from Bonus, and SG&A as a proportion of sales is not expected to fall clearly. The fourth quarter of 2026 looks more interesting thanks to seasonality and the fact that some Bonus Suki branches have started making a profit, with the number of branches rising from 35 at the end of the second quarter of 2026 to 44 at the end of the third quarter of 2026, while the company is still looking for the right store format for wider expansion. Growth in 2027 has other drivers beyond Bonus Suki, including the rebranding of Laem Charoen Seafood, the expansion of Hikiniku To Come from its current four branches, and a new membership system that will link customer bases across brands, helping reduce reliance on MK Suki alone. Earnings have a chance to recover from the fourth quarter of 2026 and continue into 2027, but the current share price, at a 2026 PER of about 23x, already reflects expectations for narrowing losses at Bonus Suki to a fair degree, leaving limited upside from earnings estimate upgrades and requiring clearer evidence of a recovery in sales and margins.

KGI Securities notes that the Thai restaurant market continues to grow, but same-store sales growth (SSSG) in July remained mostly negative, reflecting weak purchasing power and intense competition. MAGURO is the only leader in growth with both revenue and profit rising simultaneously, while AU and M are still awaiting recovery. OKJ faces weak demand and declining profits. The research department expects total net profit for 2026F to be 1.19 billion baht, down 9% YoY, before recovering 18% in 2027F. It selects MAGURO as the top pick with a target price of 25 baht, while M has a target price of 26 baht and AU a target price of 4.42 baht.

Kasikorn Securities reported that combined normalized profit of five listed restaurant companies in the second quarter of 2026 was 281 million baht, down 29.0% from a year earlier, pressured by negative same-store sales growth and lower gross margin, but up 18.7% from the previous quarter. M and ZEN posted combined normalized profit of 230 million baht, down 19.6% year-on-year but up 28.7% quarter-on-quarter. OKJ recorded a normalized loss of 25 million baht as same-store sales growth fell 29.6%. MAGURO delivered the strongest profit growth at 23.4%. Kasikorn Securities maintained a negative view on the restaurant group amid weak demand and price competition, and prefers M over ZEN because of clearer earnings recovery prospects. M trades at a 2026 price-to-earnings ratio of 20.6 times and offers a dividend yield of 4.9%.

Kasikorn Securities Research forecasts normalized profit for Zen Corporation Group, or ZEN, in the second quarter of 2026 at 17 million baht, up 58.5 percent from the same period last year and up 7.9 percent from the previous quarter. First-half 2026 normalized profit is expected to grow 39 percent year-on-year, accounting for 54.3 percent of the full-year normalized profit estimate. Meanwhile, same-store sales remain in negative territory, reflecting a gradual recovery in demand. The research team maintains a hold rating and a target price of 5.60 baht for ZEN shares, which trade at a 2026 price-to-earnings ratio of 27.3 times, above the three-year average annual normalized profit growth rate of 20.3 percent, suggesting limited share price upside potential. For MK Restaurant Group, or M, normalized profit in the second quarter of 2026 is forecast at 181 million baht, down 34.3 percent from a year earlier but up 10.9 percent from the prior quarter. Same-store sales have turned negative again due to the impact of government economic stimulus measures. The research team maintains a hold rating and a mid-2027 target price of 19.90 baht.

Analysts at Krungsri Securities forecast that MK Restaurant Group, or M, will post a net profit of just 160 million baht in the second quarter of 2026, down 42 percent from the same period last year and down 2 percent from the previous quarter. The gross margin is expected to decline to 60.9 percent, due to a higher revenue share from the buffet business and elevated SG&A expenses from aggressive branch expansion, pushing the net margin down to an estimated 3.8 percent. Although total revenue grew 10 percent year-on-year, most of the growth came from the Bonus Suki brand, which had 35 branches at quarter-end and accounted for about 14 percent of revenue. Meanwhile, legacy core brands such as MK, Yayoi, and LCS saw same-store sales drop by an average of 3.5 percent, weighed down by weaker purchasing power, the impact of the Thai Chuay Thai Plus scheme in June, and a net closure of 12 branches. For the third quarter of 2026, net profit is expected to decline further due to seasonal factors and persistently negative same-store sales. The full-year 2026 net profit estimate is likely to be cut by 17 percent to 706 million baht, down 16 percent from the previous year, and the target price is likely to be trimmed by 9 percent to 21 baht, with a NEUTRAL rating maintained, as earnings visibility remains uncertain amid intense competition in the suki-shabu market.