Our TRADING BUY stands, led by the sugar price up-cycle through 2022 (related to Brazil’s drought and last month’s frost damage impacting its 2021/22 cane output). We suggest that investors ignore its earnings and look at the global sugar price which is still in a bull cycle.
Core profit aligned with our model
KSL posted a net profit for 3Q21 (May 1-Jul 31, 2021) of Bt56m, down 71% YoY and 45% QoQ. Stripping out extra items in 3Q21—Bt33m FX loss and Bt43m loss from derivative hedging—core profit was Bt133m, down 30% YoY and 20% QoQ. Net profit was 53% short of our model thanks to the above one-time expenses, but core profit was in line with our estimate. Sales beat our model by 38%, thanks to higher sugar sales and sugar export sales volume than estimated. GM of 10.7% was much below our model of 16%, due to higher cane and bagasse costs than estimated. Total equity income missed our model by 39% led by lower BBGI profit than modeled.