Equity Analysis /

Thai Union Group PCL: Favorably weak THB to underpin sales and GM in 2H22

  • Solid 3Q22 sales growth expected for all business units

  • GM anticipated to rise QoQ to 18%; QoQ stable equity loss from RL

  • Insights into 3Q22—core profit to rise YoY and QoQ

Bualuang Securities
30 September 2022

TU stands to benefit from the deep weakening of THB against USD in 2H22, as it will favorably boost sales via higher selling prices, GM and earnings. Moreover, the eased cost inflation for the packaging and freight will lead to earnings expansion in 2H22. Our TRADING BUY stands, based on 2H22 improved earnings and its cheap valuation—PER of 12.7x against its long-term mean of 13.7x.

Solid 3Q22 sales growth expected for all business units 

We model Bt39.81bn in sales for 3Q22, up a solid 12% YoY and 2% QoQ, underpinned by the deep depreciation of THB/USD, sales price and sales volume increases. With regard to FX, we assume the THB/USD average of Bt36.35/USD for 3Q22, which is likely to depreciate deeper by 10% YoY and 6% QoQ, with the rate of THB/USD at Bt38/USD at end-3Q22 against Bt35.3/USD at end-2Q22. In effect, it will favorably impact the sales price in THB terms in 3Q22.