Earnings Report /
Thailand

Khon Kaen Sugar Industry PCL: Beat estimates; a robust YoY profit jump expected for 2Q22

  • Net and core profits exceeded our model

  • KSL posted a net profit for 1Q22 of Bt332m

  • We model a Bt250m core profit for 2Q22

Bualuang Securities
14 March 2022

Our TRADING BUY stands, led by fatter GM for sugar and electricity units, leading to a strong 2022 core profit bounce. Key positive factors are the sustained high global sugar prices (which will be supported by higher oil price) and a jump in sugar sales volume (which is driven by Thailand’s surge in cane/sugar volumes for 2021/22).

Net and core profits exceeded our model

KSL posted a net profit for 1Q22 (Nov 1, 2021-Jan 31, 2022) of Bt332m, up 8% YoY and 123% QoQ. Stripping out two extra items in 1Q22—1) Bt3m FX gain and 2) Bt21m loss from derivative hedging—core profit for the quarter was Bt350m, up 12% YoY and a QoQ turnaround from a Bt365m 4Q21 core loss. Net and core profits beat our model by 7% and 11%, respectively, thanks to higher GM and other income than estimated. Sales were consistent with our estimate while GM of 18.4% in 1Q22 beat our model of 17.5% and 1.8% in 4Q21 (but was below 23.3% in 1Q21 due to higher 1Q22 sugar export volumes than in 1Q21). Other income beat our estimate by 37%. Equity income missed our model by 23% because of lower-than-estimated BBGI profit.