Equity Analysis /

Thaifoods Group PCL: Higher Thai pork price expectations boost 2022 earnings

  • Record-setting Thai pork price; a high price range through 1H22

  • Upgraded pork price assumption and net profit forecast for TFG

  • Scope for future upside from higher chicken sales price

Bualuang Securities
6 January 2022

The recent record-breaking Thai pork price prompts us to upgrade TFG’s pork price assumption and earnings for 2022. While the historic-high of Thai pork price is likely to be temporary, lasting at least through the Chinese New Year Festival, we expect prices to sustain in a high range of above Bt80/kg thereafter. Its 3Q21 huge loss was the nadir before its strong bounce in 2022. Our TRADING BUY stands, premised on its 2022 earnings jump and its attractive valuation—2022 PER of 16.3x (against its long-term PER of 23.8x).

Record-setting Thai pork price; a high price range through 1H22

Thai pork price hit the new record of above Bt100/kg during Jan 4-5. Within one month, both provincial and Bangkok pork prices jumped 29-30% (from Bt79-81/kg in early-Dec to Bt103-105/kg during Jan 4-5). We attribute the recent price bounce to the tighter supply caused by the re-emergence of Porcine Reproductive and Respiratory Syndrome [PRRS] disease outbreak and flooding in 3Q21 and the seasonally higher demand during year-end and New Year festivities. We estimate that pig sow and fattening pig supply have declined by 30% since early-2021 until now, led by small pork operators exiting the industry.