Equity Analysis /
Thailand

Carabao Group PCL: A weak 3Q22, then a strong 4Q22

  • Expect QoQ profit slippage for 3Q22

  • Slim margins will persist into 3Q22 …

  • …to be followed by the best quarter of the year

Bualuang Securities
29 August 2022

We now expect CBG’s 3Q22 earnings (up YoY from its low 3Q21 base) to soften QoQ; we had previously expected both YoY and QoQ growth. Because of diminished expectations for export sales and margins, we have trimmed our profit forecasts by 5% for 2022 and 6% for 2023. Although our YE22 target price downsizes from Bt135 to Bt130, our BUY call stands, premised on a cheap valuation against solid long-term fundamentals.

Expect QoQ profit slippage for 3Q22

At CBG’s analyst meeting, management was subdued over the outlook for 3Q22 revenue and margins, but remained positive over the prospects for 4Q22. 3Q22-to-date exports have been softer than we had expected, particularly to Myanmar (11% of 1H22 sales), due to fallout from civil unrest, which has intensified in recent months. CBG’s 1H22 sales to Myanmar were Bt1.05bn; we now assume that 2H22 exports to Myanmar will dive by about 50% HoH.