Our BUY rating stands based on sustained solid 2022 earnings and its valuation unlocking from listing i-Tail in the SET during 2H22.
Net profit in-line but core profit beat our model
TU posted a 4Q21 net profit of Bt1.93bn, up 32% YoY and flattish QoQ. Excluding three extra items in 4Q21—1) Bt136m FX gain, 2) Bt154m MerAlliance Poland restructuring costs and 3) Bt83m in loan forgiveness from Red Lobster (RL)’s Paycheck Protection Program (PPP)—core profit was Bt1.87bn, up 18% YoY and 21% QoQ. Net profit was aligned with our model, but core profit beat it by 7% thanks to higher sales and other income and lower tax expense than modeled. Sales beat our model by 3% while other income exceeded our estimate by 22%. RL’s equity loss (excl. lease accounting adjustment and loan forgiveness) was shallower than our model but Avanti’s equity profit was lower than our estimate (due to weakening feed and frozen seafood businesses from higher raw material and freight costs). GM of 18.6% was near our 18.5% estimate (against 18% in 4Q20 and 3Q21).