Equity Analysis /

Khon Kaen Sugar Industry PCL: Beneficiary of Russia-Ukraine war spillover

  • Russia-Ukraine war to trigger high sugar price and low stocks

  • Slight upward revision of 2022/23 sugar surplus—not meaningful

  • KSL’s bigger-than-estimated 2022 cane and sugar output

Prasit Sujiravorakul
Prasit Sujiravorakul

Equity Research Analyst

Bualuang Securities
25 March 2022

We believe that KSL stands to benefit from the Russia-Ukraine conflict in light of higher oil prices, prompting the shift toward more ethanol (and lower sugar) production and the current low global sugar stocks amid the sugar shortage in Europe. Thailand’s enhanced cane and sugar output plus the sustained high global price of 18-20 cents/lb will boost KSL’s 2022 GM and earnings. Our TRADING BUY stands on KSL, based on a 2022 earnings bounce.

Russia-Ukraine war to trigger high sugar price and low stocks

The Russia-Ukraine war has so far resulted in low global sugar stocks as major consumers including India, Europe and China have started to build up their sugar inventories. In particular, Europe has been facing possible sugar shortages and is now rebuilding their stocks. Meanwhile, China has imported big bulks of sugar from India. In other words, demand for sugar has been increasing during Jan-Feb 2022.