亚太地区零售业-东盟的生活：家装入门-2021.7.26-58正式版

26July2021

Focuschartsandtable

Figure2:Homeimprovementspendingpercapitastill

Figure3:ASEANhomeimprovementcounterpositionings

considerablylowforASEANcountries

(US$)

1,200

1,000

1,000

800

600

400

390

310

220

200

196

200

120

110

37

29

12

9

5

0

Source:Companydata,CreditSuisseestimates Source:Companydata,CreditSuisseresearch

Figure4:HomeimprovementretailspacepercapitalikewisestillhasroomforupsidewithinASEAN

(squarefeetpermillionpeople)

10.0

9.0

8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0

SingaporeIndonesiaPhilippinesVietnamMalaysiaThailand

Japan

Australia

USA

UK

Source:Companydata,CreditSuisseestimates

Figure5:RevenuepersqmvscapexcostpersqmforASEANhomeimprovementstocks

4,000

3,500

HMPRO

DFI

3,000

sqm

2,500

per

inUSD

2,000

Revenue

1,500

MRDIY

ACES

WLCON

1,000

HOME

GLOBAL

500

0

0

10

20

30

40

50

60

CAPEXinUSDpersqm

Source:Companydata,CreditSuisseestimates

Figure6:HomeimprovementmarketgrowthlikelybetoledbyIndonesiaandthePhilippinesoverthenextfiveyears

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

IndustrysizeinUSDmn

Indonesia

2,140

2,383

2,604

2,848

3,137

3,002

3,334

3,721

4,233

4,801

5,423

Malaysia

1,041

1,084

1,156

1,196

1,231

1,099

1,128

1,167

1,212

1,260

1,311

Philippines

771

785

813

879

925

736

808

888

976

1,072

1,176

Singapore

167

167

166

167

167

160

165

168

171

175

178

Thailand

1,600

1,676

1,752

1,842

1,932

1,693

1,860

1,973

2,079

2,184

2,291

YoYGrowth

Indonesia

2.2%

11.3%

9.3%

9.4%

10.1%

-4.3%

11.0%

11.6%

13.8%

13.4%

12.9%

Malaysia

3.8%

4.1%

6.6%

3.5%

2.9%

-10.7%

2.6%

3.5%

3.9%

4.0%

4.0%

Philippines

1.6%

1.9%

3.5%

8.1%

5.2%

-20.4%

9.8%

9.9%

9.9%

9.8%

9.7%

Singapore

0.8%

-0.5%

-0.4%

0.4%

0.1%

-3.9%

3.1%

1.7%

2.0%

2.0%

2.0%

Thailand

3.9%

4.7%

4.6%

5.1%

4.9%

-12.3%

9.8%

6.1%

5.4%

5.0%

4.9%

Source:Euromonitor

ASEANLiving

2

26July2021

Aprimeronhomeimprovement

Afast-growingretailcategory

WebelievestructuraltrendsarecompellingandshouldserveastailwindsfortheASEANhomeimprovementsector.Apositivedemographicprofileandrisingdisposableincomesshouldbothcontributetofurthergrowth.Inadditiontothis,theCOVID-19pandemichasbroughtupatrendofurbanflightanddecentralisation,whichshouldultimatelyacceleratethegrowthofurbanisationinASEANcountries.Workingfromhomeandthedigitalisationoftheworkplacecontinuetogainwiderscaleadoptionasafeasibleservicedeliverymodel,whichweseeasbenefitingthehomeimprovementsector,asmoreindividualsspendlongertimeathome.

Movingforward,webelievethesectorwouldneedspecialisedandsophisticatedfulfilmentinfrastructure,andtheprovisionofrobustonlineguidedselling/supporttocontinuegrowing.ASEANplayersarecurrentlylookingtobuilduptheiromni-channelplatforms,orlaunchtheirownonlinesellingportal(ACES’sRorHOME&Wilcon’sonlineportals).

ASEANhomeimprovementisunderpenetrated

TheASEANhomeimprovementsectorisa~US$6.7bnindustrythatisrelativelyunderpenetratedandhasamplegrowthopportunities.ASEANhomeimprovementspendingpercapita(US$61/capita)isathirdoftheAsianaverage(US$157/capita)andlessthanatenthofUSspending.AmongstASEANcountries,itseemsthespendingpercapitaishigherforSingaporeatUS$220/capita,followedbyMalaysiaatUS$37/capita,ThailandatUS$29/capita,thenIndonesiaandthePhilippinesatUS$12/capitaandUS$9/capita,respectively.Weseethesectordeliveringafive-yearCAGRof~9%to2025E,drivenbyIndonesiaandthePhilippineswhichareexpectedtohaveCAGRsof~13%and~10%,respectively.

Countryoutlookandcompetitivelandscape

InMalaysia,thehomeimprovementsectormadeupasmall3.1%oftotalretailsalesin2020,butisexpectedtooutpacetheoverallretailindustry'sgrowthoverthenextfiveyears.Theexpansionoftheoverallretailspacehasbeenakeycontributortogrowth.ForThailand,webelievetheindustryisinthemid-stageofitsgrowth.Weexpectthespendingmomentumtoaccelerateinthenextseveralyearsonthebackofsomebehavioralshifttowardmoreat-homeactivitiesandpent-updemands.Omni-channelexpansionhasbeenakeythemeinThailandwithmajorplayerslikeHMPROseeingsignificantomni-channelgrowth.InIndonesia,growthhasbeendrivenbyrelativelylowhomeownershipinIndonesia.Weexpectthegrowthtocontinuethisyear,asstructuraldriversremainintact.InthePhilippines,wehavebeenseeingarecoveryinsalesforhomeimprovementcountersaslockdownrestrictionscontinuetoease.Weexpecttoseecontinuedhousingmarketgrowthanddecentralisationtohelpdrivegrowthinthelongrun.Finally,inSingapore,growthmorethandoubledinthefirstthreemonthsof2020,broughtonbySingaporeanssettinguphomeofficesinresponsetothecoronavirusoutbreak.

Homeimprovementinthelimelight

Thesectorhasbeengaininginterest,asithasbeenseenasakeybeneficiaryoftheCOVID-19crisis,withmorepeoplespendinglongertimesathome.Movingforward,webelievethekeydriverstowatchoutforarenewandmeaningfulstoreopenings,healthysamestoresalesgrowthwhichshouldacceleratefromalowbasein2020,andmarginimprovements.OurtoppickswithinASEANincludeMRDIinMalaysiaandACESinIndonesiafortheirstronggrowthandreturnprofiles.WealsolikeHOMEinthePhilippines,HMPROinThailand,andDFIinSingapore.

ASEANLiving

WebelievestructuraltrendsarecompellingandshouldserveastailwindsfortheASEANhomeimprovementsector

Webelievethesectorneedsspecialisedandsophisticatedfulfilmentinfrastructuretocontinuegrowing

TheASEANhomeimprovementsectorisa~US$6.7bnindustrythatisrelativelyunderpenetratedandhasamplegrowthopportunities

OurtoppicksincludeMRDI,ACES,HOME,HMPRO,andDFI

3

26July2021

Peervaluations

Figure7:ASEANhomeimprovementandAPACretailvaluations

Name

Rating

TP

U/D(%)

Marketcap

EV

P/E

ROE(%)

3YCAGRs2019-22E(%)

(US$mn)

(US$mn)

2020A

2021E

2022E

2020A

2021E

2022E

Revenue

EBITDA

Income

ASEANHomeImprovement

AceHardwareIndonesia

O

1560

17%

1,574

1,416

28.0

27.2

21.1

15.6

15.2

17.4

4.1

n.m.

1.4

DairyFarmIntl

O

5.3

30%

5,506

6,323

20.0

17.2

13.4

23.2

25.6

30.0

0.2

5.1

8.7

SiamGlobalHousePCL

O

28.5

20%

3,329

3,803

56.0

38.6

33.7

11.5

15.0

15.6

6.6

14.1

15.8

HomeProductsCenterPCL

O

18

31%

5,476

5,966

35.0

29.0

25.3

23.8

26.8

28.9

1.1

3.5

4.9

AllHomeCorp.

O

10

31%

569

663

29.0

21.8

17.3

7.4

9.6

11.1

13.7

9.5

16.4

MR.D.I.Y.Group

O

4.5

29%

5,187

5,463

65.0

40.3

33.0

38.5

47.3

44.8

27.4

23.8

24.0

WilconDepotInc.

O

24

18%

1,660

1,762

57.6

37.9

29.1

9.5

12.4

14.3

11.4

13.0

10.5

Average

3,329

3,628

41.5

30.3

24.7

18.5

21.7

23.1

9.2

11.5

11.7

AsiaRetail

GSRetail

O

45,000

27%

3,237

4,068

22.1

24.0

17.8

7.3

6.1

7.5

3.2

5.0

16.2

LotteShopping

U

96,000

-13%

2,718

9,199

n.m.

19.3

12.1

-8.6

1.4

2.3

n.m.

2.7

n.m.

E-MARTCo.Ltd

O

230,000

45%

3,842

5,867

11.9

12.6

11.0

4.1

3.7

4.1

10.4

15.1

19.6

BGFRetail

O

200,000

19%

2,533

2,471

23.7

19.2

15.1

18.2

17.5

17.5

6.4

7.7

8.5

CentralRetailCorporationPCL

O

42

33%

5,774

9,088

n.m.

47.6

21.9

-1.1

7.3

14.2

5.2

14.1

6.0

MatahariDepartmentStore

U

1,505

-19%

338

373

n.m.

16.4

8.3

-150.3

33.9

40.2

n.m.

n.m.

n.m.

MAPActive

O

3,000

79%

330

323

725.8

31.3

10.2

0.2

4.9

13.4

2.0

n.m.

n.m.

MitraAdiperkasa

O

950

47%

739

745

n.m.

52.2

13.6

-13.1

4.6

15.2

3.1

n.m.

n.m.

PuregoldPriceClub,Inc

O

48

22%

2,266

1,831

14.1

13.8

12.1

11.7

11.2

11.7

7.6

8.7

11.7

RamayanaLestariSentosa

N

650

4%

306

195

n.m.

126.1

13.2

-3.4

0.9

8.2

n.m.

n.m.

n.m.

RobinsonsRetailHoldings,Inc.

O

79

49%

1,617

1,372

23.3

18.2

15.7

4.7

5.8

6.4

2.6

n.m.

4.4

Average

2,208

3,416

159.5

36.3

13.5

-13.5

9.2

13.4

5.4

8.9

12.4

Source:Companydata,CreditSuisseestimates

ASEANLiving

4

26July2021

Afast-growingretailcategory

Demographicadvantagestodrivegrowthforyearstocome

Demographicsisoneofthe"bigpicture"themesthathasanenormousimpactontheworld'seconomicgrowthpatterns.Andinthecomingdecades,itisgoingtodrivegrowthinanumberofASEANcountries.PopulationgrowthisexpectedtoaccelerateinmanyASEANcountriesandinturndrivelong-termeconomicgrowth.IndonesiaandthePhilippinesstandoutwithfavourabledemographicstructureswhereintheirpopulationstructurehas64%ofpeopleintheeconomicallyactiveagebracketandlessthan10%ofthepopulationagedabove60years.Bothcountriesarealsoseeinganaveragepopulationgrowthof1.3-1.8%p.a.TheseallowIndonesiaandthePhilippinestoenjoyademographicdividendviaahigherproportionofhouseholdconsumptionandfastereconomicgrowth.ThePhilippinesenjoysanedgeoverIndonesiagivenitslowermedianage,slightlyfasterpopulationgrowthandexpansionofworkingpopulationthrough2040.Conversely,ThailandandMalaysiahaveagingpopulations,withcloseto20%alreadyinthe>60yearsoldandupsegment.Malaysia'spopulationgrowthrateslowingtoalow0.4%,withthoseaged60andabovegrowingfrom2.5mnin2019to3.4mnin2020andcomprising10.7%ofthepopulation.ForSingapore,residentsaged60yearsandabovemadeup23%ofthetotalresidentpopulation.

Figure8:DemographicsdriveASEANgrowth

Demographicsisoneofthe"bigpicture"themesthathasanenormousimpactontheworld'seconomicgrowthpatterns

Source:Euromonitor

Figure9:MedianageofASEANcountries

40

35

30

25

20

15

10

5

0

Laos

PhilippinesCambodiaMyanmar

Malaysia

Brunei

Indonesia

VietnamSingaporeThailand

Source:Euromonitor

ASEANLiving

5

26July2021

HigherGDPpercapitatodrivehomeimprovementspending

HigherGDPpercapitaleadstohigherimprovementspendingpercapita,anaturalrelationshipasconsumersspendmoreastheyearnmore.AkeyobservationdrivenbyhistoricalanalysisofthedevelopmentofthepatternsofconsumerspendingamongevelopedmarketssuchastheUS,FranceandSingapore,washowamovetowardsandbeyondlevelsofGDPpercapitaofUS$5,000markedapointofacceleratingspendingondiscretionaryproductsuntilitreachestheUS$10,000level.Asthechartbelowshows,thePhilippinesisinafavourablepositionintheS-curve,asitslowlyapproachesthesweetspot.

HigherGDPpercapitaleadstoahigherimprovementspendingpercapita,anaturalrelationshipasconsumersspendmoreastheyearnmore

Figure10:Householdconsumption(US$/capitap.a.)

versusGDP/capita(US$)

Figure11:S-Curvepatternofconsumerspendinghighlightsacceleration

Source:CreditSuisseResearchInstitute Source:CreditSuisseResearchInstitute

GDPpercapitaisquiteoftenusedtorepresentspendingpower,butisnotreallyagoodindicatorforthispurpose.Inanumberofcountries,alargepartofGDPdoesnotgotohouseholds.Usingthesamesetofdata—exceptdisposableincomepercapitainsteadontheX-axis—showsthatalevelofUS$3,000indisposableincomepercapitaisthelevelofincomewherediscretionaryspendingstartstotakeoff.Per-capitadataisalmostalwaysanaveragebasedonthemean.However,thereisalargeskewinincomeinmostcountries,andparticularlythePhilippineswherethetop10%ofhouseholdstakearoundhalfofthetotalincome.Onanaverage,thePhilippines'mediandisposableincomeisapproximately27%lowerthanthemean.Thisgivesamuchbetterrepresentationofthetypicalhousehold’sspendingpower.Thefigurebelowsummarisesthebroadconclusionsofthehierarchyofneedsandthehighestandlowestgrowthratesintheconsumptionofvariouscommodities,dependingontheprevailingincomelevels.Ouranalysisalsoshowsthatdemandgrowthinmostsectorsislikelytobeexponential—theclassichockey-stickmodel,asarisingproportionofthepopulationreachesmiddle-incomelevels.

ASEANLiving

6

26July2021

Figure12:Consumerproductcategories—typicalgrowthstages

GDPpercapita

High

Medium

Low

Beverages

Appliances

Healthcare

Cereals/Snacks

Stimulants

Education

BelowUS$2,000

Apparel

Consumercredit

Two-wheelers

Meat

Cars

PCs/Laptops

Beautyproducts

Tourism/Travel

Beverages

Appliances

Apparel

Cars

Healthcare

Two-wheelers

US$2,000-5,000

Meat

Consumercredit

Cereals

Stimulants

Tourism/Travel

PCs/Laptops

Beautyproducts

Education

Beverage

Meat

Cars

Apparel

US$5,000-10,000

Home,FurnitureandAppliances

Healthcare

Cereal

PCs/Laptops

Consumercredit

Two-wheelers

Beautyproducts

Tourism/Travel

Education

Stiumlants

Education

Cereal

Two-wheelers

Healthcare

Cars

Appliances

US$10,000-25,000

Consumercredit

PCs/Laptops

Meat

Beautyproducts

Beverages

Apparel

Tourism/Travel

Stimulants

Source:CreditSuisseResearchInstitute

TheCreditSuisseResearchInstitutealsoprovidesanindividualcountry‘scorecard’,bycomparingthecurrentconsumptionofcommoditiesagainstthelikelylonger-termlevel.Inotherwords,theabovegrowthratesarebasedonincrementalpenetrationgainsoverthenextdecadeorso.Webreakdownthegrowthbrackets(againstcurrentconsumption)intothreecategories:

lowgrowth(aCAGRoflessthan5%);(2)mediumgrowth(aCAGRof5-15%);and(3)highgrowth(aCAGRofmorethan15%).

Figure13:Consumerindustryheatmap

China

India

Korea

Indonesia

Malaysia

Thailand

Philippines

Basics:Food&Beverages

Cereals/Snacks

low

low

low

low

low

low

low

Rice

low

low

low

low

low

low

low

Sugar

high

low

low

medium

low

low

low

Fruits

low

medium

low

low

medium

low

low

VegetableOils

medium

low

low

medium

low

medium

medium

Beverages

medium

high

low

low

low

low

medium

Wine

high

low

high

low

low

high

high

Beer

low

high

medium

low

low

medium

medium

Stimulants

high

medium

high

low

medium

high

low

ReadMeat

medium

low

medium

high

high

high

medium

WhiteMeat

low

high

low

high

low

medium

low

Milk

high

low

high

high

high

high

high

DiscretionarySpending

Apparel

high

medium

low

high

high

medium

high

Appliances

high

high

medium

medium

high

low

Auto

high

low

low

high

low

medium

high

TwoWheelers

high

high

low

medium

medium

low

high

ConsumerLoans

high

medium

medium

high

low

medium

high

Education

high

medium

medium

high

high

high

high

Healthcare

high

high

medium

high

high

high

high

PC/Laptop

high

high

low

high

medium

high

low

Tourism/Travel

high

high

medium

high

high

low

high

Source:CreditSuisseResearchInstitute

ASEANLiving

7

26July2021

Onehistoricalconstantinthehomeimprovementindustryisthatwhendisposableincomerises,sodoestheamountofhomeimprovementprojectshomeownersarewillingtotakeon.GDPgrowthishighlycorrelatedtohomeimprovementspending.Thisisespeciallyevidentinmoredevelopedcountrieswherehigherincomesarealsorelatedtohigherspendingonthingslikefurniture,appliances,andgeneralhomeimprovement.Themajorcontributingfactorstothehomeimprovementmarketarenewandexistinghomesales,increasingdisposableincome,risingconsumerspending,remodellingandrenovationofhomes,aswellasanincreasingmiddle-classpopulation.ThedatashowsthathomeimprovementspendingasashareofoverallspendingfollowsanS-curve.SpendingforhomeimprovementincreasesasGDP/capitamovestowardsUS$5k-10kbutdeclinesasitapproachedUS$25k,andmovesupagainonceGDP/capitahitsUS$50korhigher.Relativetotheirrespectiveincomelevels,spendingonhomeimprovementisrelativelylowforSingapore.WebelieverelativelylowerhomeimprovementshareinSingaporecouldbeduetoasignificantproportionofthepopulation(~80%)thatlivesingovernmentpublichousing,i.e.,HDBflats,whichmaynotencouragelargeinvestmentsinmorepermanentfixturesandalteration.

Urbanflight,decentralisationtodriveformoregrowth

TheCOVID-19pandemichasbeendeemedanacceleratorfordecentralization,andshouldacceleratethegrowthofurbanisationintheASEANcountries.WFHandthedigitalisationoftheworkplacecontinuetogainwiderscaleadoptionasafeasibleservicedeliverymodel.Sofar,thedisruptioncausedbythepandemichasledtoseveralkeythemes:(1)reimaginationoftheworkplaceaskeypriorityamongtopC-suites;(2)higherproductivityoutcomes;(3)pandemic-inducedopportunitiesrising;and(4)WFHevolvingintoahighlyagilecontext-driven"workfromanywhere"model.Onproductivityalone,asurveyamongenterprisesconductedbyEverestGroupshowedthat62%ofrespondentshaveseenincreasedproductivity(with13%showingadecline,while25%indicatednochange),though,wethinkWFHadoptionisstilllargelyexpectedasacatalystforcostoptimisationforoutsourcingcompanies.EverestGroupestimatesthatcompaniesthatshiftatleast50%oftheirproductivecapacityviaaWFHservicedeliverymodelcouldreap13-15%incostsavingsvsthecoststructureundertraditionalmodels.AsdecentralisationprospersandtheASEANpopulationsmoveoutsidethebusinessdistricts,homeprojectsandhomerepairscouldbemoreofalong-termproject.Currently,320mnpeopleliveintheurbanregionsofASEANcountries,andby2050,thispopulationisexpectedtoswelltonearly525mn.Theunprecedentedurbangrowthisexpectedtoleadtoarapidriseofmorethan200smallercities.Theregion’surbanisedpopulationproportionisexpectedtoincreasefrom47%in2014to65%in2050,withfiveofthetenASEANnationstransitioningfromaminorityurbanpopulationtoamajorityurbanpopulation,aspertheUnitedNations(UN).ThestatisticsbelowshowthedegreeofurbanisationintheASEANcountriesfrom2009to2019.Urbanisationisdefinedastheshareofurbanpopulationinthetotalpopulation.

Figure14:UrbanisationratesinASEANhaveincreasedslightlyoverthelastdecade

(shareofurbanpopulationintotalpopulation)

110.0%

100.0%

90.0%

80.0%

70.0%

60.0%

50.0%

40.0%

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Thailand

Philippines

Malaysia

Indonesia

Singapore

Source:Statista

Onehistoricalconstantinthehomeimprovementindustryisthatwhendisposableincomerises,sodoestheamountofhomeimprovementprojectshomeownersarewillingtotakeon

TheCOVID-19pandemichasbeendeemedasanacceleratorfordecentralisation,andshouldacceleratethegrowthofurbanisationintheASEANcountries

ASEANLiving

8

26July2021

E-commercetoprovidesupport

Bricks-and-mortarhomeimprovementretailersfeltthepressurefromonlineretailersduringtheCOVID-19pandemic,asconsumerpurchasinghabitsshiftinfavourofonlineandmobilechannels.OnlinesalesofhomeandgardenproductsintheASEANmarketsisforecasttoriseatafasterpacethanitsotherAsiancounterpartslikeJapanduetoayoungpopulation,agrowingmiddle-classpopulation,risinginternetconnectivity,andmultiplepaymentoptions,allofwhicharefavourableforthegrowthofonlineretailing.ThebulkofonlineordersareclusteredinthemajorcitiesinthedevelopingASEANmarkets,withtime-strappedyoungworkingconsumersmakinguseofthelogisticsinfrastructureofferingsame-daydeliveryservicestosavetimeandavoidtrafficcongestion.Associal-distancingmeasuresarerelaxed,theonlineshareofretailsalesgrowthcouldslowdown.However,webelievethisisstilllikelytoremainatahigherlevelvspre-COVID-19levels.Despitethetemporaryclosureofphysicalstores,consumerswhoneededtocarryoutessentialhomerepairscouldstillorderthroughe-commerceorusemessagingappslikeViberorLINEtoplaceorders.WebelievethathomeimprovementretailersinASEANarerelativelymoreresilientversusotherdiscretionaryretailers,ashomeimprovementbuyingtypicallyneedguidedsellingormerchandising,andforconsumerstoseetheproduct.Whileitisnotimpossible,thesectorwillneedspecialisedandsophisticatedfulfilmentinfrastructure,andprovisionofrobustonlineguidedselling/support.TheASEANplayersarecurrentlylookingtobuilduptheiromni-channelplatform(Thailand),orlaunchtheirownonlinesellingportal(ACES’sRorHOMEandWilcon’sonlineportals).

ASEANLiving

Bricks-and-mortarhomeimprovementretailersfeltthepressurefromonlineretailersduringtheCOVID-19pandemic,asconsumerpurchasinghabitsshiftinfavourofonlineandmobilechannels

9

26July2021

ASEANhomeimprovementisunderpenetrated

TheASEANhomeimprovementsectorisa~US$6.7bnindustrythatisrelativelyunderpenetratedandhasamplegrowthopportunity.ASEANhomeimprovementspendingpercapita(US$61/capita)isathirdoftheAsianaverage(US$157/capita)andlessthanatenthoftheUSspending.AmongsttheASEANcountries,itseemsthespendingpercapitaishigherforSingaporeatUS$220/capita,followedbyMalaysiaatUS$37/capita,ThailandatUS$29/capita,thenIndonesiaandthePhilippinesatUS$12/capitaandUS$9/capita,respectively.ASEANhomeimprovementisalsogrowingatabout6%p.a.,priortothepandemic(2014-19),butrealisedadropof9%in2020asaresultofthelockdownsimposedacrosstheASEANcountriesduringtheheightofthepandemic.Beforethepandemic,Indonesiaexhibitedthehighestgrowthwithan8.4%CAGRover2014-19,owingtothegrowingpropertydevelopmentsector,whileMalaysia,ThailandandthePhilippinesgrewat4-4.6%,benefitingfromtherapidriseinthenumberofnewhouseholds.Meanwhile,Singaporewastheslowest,atalmostflat(0.1%),giventhehigherrateofurbanisationversusitspeers.ThesupplyofretailspaceinASEANisstillunderpenetratedcomparedtootheradvancedeconomies,withasignificantlylowersquarefeetpercapitalforbothtotalmodernretailandhomeimprovementretailstores.

TheASEANhomeimprovementsectorisa~US$6.7bnindustrythatisrelativelyunderpenetratedandhasamplegrowthopportunities

Figure15:HomeimprovementspendingpercapitahighestinSingaporeamongASEAN5

Figure16:HomeimprovementretailsectorasapercentageoftotalretailmeanwhilehighestinThailandamongASEAN5

(US$)

14.0%

1,200

1,000

1,000

12.0%

800

10.0%

600

8.0%

400

390

6.0%

310

220

200

196

4.0%

200

120

110

37

29

12

9

5

2.0%

0

0.0%

SingaporeIndonesiaPhilippinesMalaysiaJapan

UK

Australia

US

VietnamThailand

Source:Companydata,CreditSuisseestimates Source:Companydata,CreditSuisseestimates

Furthermore,populationgrowthandurbanisationcouldprovideopportunitiesfordeveloperstoexpandtheirdevelopmentsoutsideofthecities,andforhomeimprovementretailerstosetupnewstorestoservethesenewcatchmentareas.HomeimprovementretailareaisstronglyrelatedtolandareaandpopulationinASEAN.IndonesiaandThailandsawthehighestretailareagrowthinthepasttenyears,thankstoaggressivestoreexpansionsbykeyplayers.HomeimprovementretailspacepercapitawasthehighestinMalaysia,at0.23sqm,followedbyThailand(0.17sqm)andSingapore(0.09sqm)in2019.Meanwhile,thelowretailspacepercapitainIndonesiaandthePhilippinesprovidesanopportunityforfurtherpenetration,inourview.Therewere72,722homeimprovementstoresinASEANin2019,withIndonesia,Malaysia,andThailandaccountingforover85%oftotalstoresintheregion.IndonesiaandThailandsawthehighesthomeimprovementstoresgrowthinthepasttenyears,inlinewithretailareagrowth.

Furthermore,populationgrowthandurbanisationcouldprovideopportunitiesfordeveloperstoexpandtheirdevelopmentsoutsideofthecities

ASEANLiving

10

26July2021

Figure17:Homeimprovementstorespermillionpeople,2019

450

400

350

300

250

200

150

100

50

0

UK USA Japan Thailand Australia Malaysia Vietnam SingaporeIndonesiaPhilippines

Figure18:Homeimprovementretailspacepercapita,2019

(squarefeetpermillionpeople)

10.0

9.0

8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0

SingaporeIndonesiaPhilippinesVietnamMalaysiaThailand

Japan

Australia

USA

UK

Source:Companydata,CreditSuisseestimates Source:Companydata,CreditSuisseestimates

GrowthledbyIndonesiaandthePhilippines

Movingforward,weexpectASEAN’shomeimprovementindustrytogrowanaverage7%(2020-25),withfastergrowthfromIndonesia(a13%CAGR)andthePhilippines(a10%CAGR),followedbyThailandandMalaysiawhichareexpectedtodeliver6%and4%five-yearCAGRs(2020-25),respectively.Meanwhile,Singaporeisexpectedtoexhibitaslower2%CAGR.Growthseemstobecorrelatedtothelevelofurbanisationintherespectivecountries,withfastergrowthincountriesthathavefasterhouseholdformation.

Figure19:Growthinretailsalespercapitaofthehomeimprovementsector

2014-2019A

2020-2025F

Indonesia

8%

13%

Malaysia

4%

4%

Philippines

4%

10%

Singapore

0%

2%

Thailand

5%

6%

Source:Euromonitor

Movingforward,weexpectASEAN’shomeimprovementindustrytogrowanaverage7%

Figure20:Homeimprovementmarketsizeandgrowth2015-25E

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

IndustrysizeinUS$mn

Indonesia

2,140

2,383

2,604

2,848

3,137

3,002

3,334

3,721

4,233

4,801

5,423

Malaysia

1,041

1,084

1,156

1,196

1,231

1,099

1,128

1,167

1,212

1,260

1,311

Philippines

771

785

813

879

925

736

808

888

976

1,072

1,176

Singapore

167

167

166

167

167

160

165

168

171

175

178

Thailand

1,600

1,676

1,752

1,842

1,932

1,693

1,860

1,973

2,079

2,184

2,291

YoYGrowth

Indonesia

2.2%

11.3%

9.3%

9.4%

10.1%

-4.3%

11.0%

11.6%

13.8%

13.4%

12.9%

Malaysia

3.8%

4.1%

6.6%

3.5%

2.9%

-10.7%

2.6%

3.5%

3.9%

4.0%

4.0%

Philippines

1.6%

1.9%

3.5%

8.1%

5.2%

-20.4%

9.8%

9.9%

9.9%

9.8%

9.7%

Singapore

0.8%

-0.5%

-0.4%

0.4%

0.1%

-3.9%

3.1%

1.7%

2.0%

2.0%