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Charoen Pokphand Foods: In-line results; solid YoY core profit rise expected for 2Q21

  • Earnings in line with model; equity income from CPALL missed
  • CPF posted a 1Q21 net profit of Bt6.95bn
  • We model a Bt6bn core profit for 2Q21

Despite the 2021 earnings cut, its valuation is still cheap—2021 PER of 9.1x against its long-term PER mean of 12.7x. Our BUY rating stands.

Earnings in line with model; equity income from CPALL missed

CPF posted a 1Q21 net profit of Bt6.95bn, up 14% YoY and 8% QoQ. Excluding extra items in 1Q21—Bt6m FX gain, Bt154m loss from biological assets and Bt10m in reversal of asset impairment—core profit was Bt7.08bn, up 9% YoY and 11% QoQ. Net and core profits were consistent with our model. Sales, gross profit, after-tax profit beat our model by 4%, 11% and 63%, respectively. However, equity income undershot our model by 43% due to CPALL’s missed net profit. GM of 19.9% beat our 18.6% estimate and increased from 18.3% in 1Q20 and 17.1% in 4Q20 due to the de-consolidation of China’s feed business.  


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