Earnings Report /

Charoen Pokphand Foods: Core profit beat estimates; a YoY core turnaround expected in 3Q22

  • Core number exceeded our model

  • CPF posted a 2Q22 net profit of Bt4.21bn

  • We model a Bt4bn core profit for 3Q22

Bualuang Securities
16 August 2022

Our TRADING BUY stands, based on its YoY 2H22 core turnaround.

Core number exceeded our model

CPF posted a 2Q22 net profit of Bt4.21bn, down 11% YoY but up 48% QoQ. Excluding seven extra items in 2Q22—1) Bt1.7bn in deferred tax expense related to the organizational restructuring, 2) Bt208m FX loss, 3) Bt634m gain from biological assets, 4) Bt545m in after-tax gain from trading CPALL shares, 5) Bt51m in reversal of asset impairment, 6) Bt1.43bn in gain from a change in fair value of property for investment and 7) Bt145m gain from business purchase below the fair value—it posted a Bt3.31bn core profit for 2Q22, down 11% YoY but up a robust 341% QoQ. Net profit was 8% short of our estimate due to the above huge extra tax expense item, but core profit beat our model by 9% thanks to higher sales and lower tax expense than modeled. Sales exceeded our model by 7% while GM of 14.5% was close to our 14.7% estimate (against 16.4% in 2Q21 and 12.8% in 1Q22). The Bt793m equity loss was thanks to CTI’s and HyLife’s deeper loss than modeled.