Equity Analysis /
Thailand

Thaifoods Group PCL: Bullish on Thai pork up-cycle

  • Sustained positive price outlook for chicken at least through YE22

  • More bullish on pork up-cycle at least through YE23

  • Increased 3Q22 export volume; more bullish on 2022 sales target

Bualuang Securities
29 August 2022

We sense that management is more bullish on Thai pork up-cycle than previously after they extended the up-cycle by another six months (or through YE23 under the base-case scenario), given the delayed supply recovery of small-scale operators. Regardless, we remain conservative with our current assumption that the pork up-cycle will last through mid-2023 before retreating slightly in 2H23. In the meantime, its earnings will be robust in 2H22. Our TRADING BUY stands, based on its 2022 profit jump and its cheap valuation—2022 PER of 8x (against its long-term mean of 19x).

Sustained positive price outlook for chicken at least through YE22

Management remains positive on the Thai chicken price outlook, given that the chicken supply increases from both small-scale and large-scale operators have been modest. The industry-wide chicken slaughtering capacity is currently 35-36m birds/annum, which is still not at the pre-COVID 19 level.