Equity Analysis /
Thailand

Khon Kaen Sugar Industry PCL: Brazil’s bigger shift to ethanol—downside to 2022/23 global surplus

  • Downside risk to current 2022/23 global sugar surplus estimate

  • Positive view toward the global sugar price in 2022/23

  • KSL’s increased cane and sugar output to continue into 2023

Prasit Sujiravorakul
Prasit Sujiravorakul

Equity Research Analyst

Bualuang Securities
20 June 2022

We believe that the current 2022/23 global sugar surplus estimate has a downside risk from Brazil’s lower sugar output due to more diversion to ethanol production amid sustained high oil prices. With sustained high global sugar price, bigger sugar and bagasse volumes, we expect fatter sugar and electricity profits in 2022. Our TRADING BUY stands, premised on 2022 earnings bounce and its cheap valuation (14.9x against its long-term PER mean of 17.1x).