Earnings Report /
Thailand

Thai Union Group PCL: Exceeded our estimates; strong earnings to sustain in 3Q20

  • Net and core profits beat our model

  • TU posted a net profit for 2Q20 of Bt1.72bn

  • The YoY big net profit jump was due to two main extra expenses in 2Q19 comprising

Bualuang Securities
13 August 2020

Despite its strongest 2Q20 results, its 2H20 profit will be comparable to 1H20 given that 3Q20 will sustain a strong momentum from 2Q20. Our BUY rating stands based on its strong 3Q20 earnings and a cheap valuation—2020 PER of 11.9x versus its long-term mean of 13.9x).

Net and core profits beat our model

TU posted a net profit for 2Q20 of Bt1.72bn, up 1,439% YoY and 69% QoQ. The YoY big net profit jump was due to two main extra expenses in 2Q19 comprising: 1) Bt1.86bn in expenses for US legal settlements and 2) Bt205m in additional 100-day employee benefit provision. Excluding two extra items in 2Q20—Bt206m in FX gain and Bt14m in losses from discontinued operation—core profit for the quarter was Bt1.52bn, down 3% YoY but up 19% QoQ. Net profit beat our model by 32% thanks chiefly to larger FX gain than modeled, while core profit exceeded our estimate by 10%, due to higher sales and GM and lower tax expense than modeled. Sales beat our model by 3% while GM of 18.2% (which was an historical high) exceeded our 17.6% estimate.