Equity Analysis /

GFPT PCL: Accumulate stock on share price weakness

  • Insights into 2Q22—a robust YoY profit jump

  • Sustained high live chicken and byproduct prices to-date

  • GFPT still enjoys the handsome profits.

Bualuang Securities
25 July 2022

Although the government has recently signaled an expected drop in future live chicken price from its current super-high level of Bt47-54/kg, we currently see only a 5-10% drop led by softer raw material costs. Even with a possible near-term fall in live chicken and byproduct prices, GFPT will still enjoy handsome profits off its chicken operations. In the meantime, its YoY earnings growth will be robust from 2Q22 through 4Q22. We recommend that investors accumulate the stock given its share price weakness. Its valuation is cheap—2022 PER of 13.3x against its up-cycle PER of 20x.

Insights into 2Q22—a robust YoY profit jump

We model a Bt450m net profit for 2Q22, up a robust 148% YoY but down 1% QoQ. Excluding FX and derivative items, we estimate a Bt476m core profit, up 172% YoY and 18% QoQ. The new 2Q22 core profit forecast is higher than our earlier Bt450m estimate thanks to expanded GM estimate (15.5% against our previous estimate of 14%) and higher domestic byproduct prices than our previous estimate.