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Thai Union Group PCL: Beat expectations; a solid YoY core profit rise seen in 2Q21

  • Net and core profits surpassed our estimates
  • TU posted a 1Q21 net profit of Bt1.8bn
  • Net and core profits exceeded our model by 29% and 30%

Our BUY rating stands based on its continued YoY 2Q21 profit rise and a cheap valuation—2021 PER of 12x versus its PER mean of 13.6x).

Net and core profits surpassed our estimates

TU posted a 1Q21 net profit of Bt1.8bn, up 77% YoY and 24% QoQ. Excluding four extra items in 1Q21—1) Bt244m FX gain, 2) Bt207m in expense related to Red Lobster (RL)’s lease accounting adjustment in 2020, 3) Bt53m tax credit related to RL’s lease accounting adjustment and 4) Bt73m in expense related to fair value adjustment from Russian business—core profit was Bt1.79bn, up 39% YoY and 13% QoQ. Net and core profits exceeded our model by 29% and 30%, respectively, thanks to higher GM, lower SG&A expenses and bigger share of profit from both RL and Avanti Feeds. Sales beat our model by 1%. GM of 17.7%—up from 16.2% in 1Q20 but down slightly from 18% in 4Q20—beat our 17% estimate. Equity loss from affiliates beat our model by 339%, due to better bottom-lines of RL and Avanti Feeds than modeled.


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