We believe that there is a 10-15% upside to our 2022 earnings forecast given the Chinese pork price has exceeded our expectations. We will revisit its pricing assumption soon. With the anticipated YoY core turnaround in 2H22 led by robust livestock performance, we reiterate a TRADING BUY call on CPF.
Insights into 2Q22—QoQ big jump in core profit anticipated
We now model a Bt4.56bn net profit for 2Q22, down 4% YoY but up 60% QoQ. Excluding the FX item, gain from biological assets (from higher Vietnamese and Thai pork prices) and gain from trading CPALL shares, we estimate a Bt3.03bn 2Q22 core profit, down 18% YoY but up a robust 303% QoQ. These new forecasts are higher than our previous estimates of Bt3bn net profit and Bt2.5bn core profit due to bigger CTI’s gain from biological assets (related to the big jump in Chinese pork price to CNY20.3/kg as at end-2Q22 against CNY12.6/kg as at end-1Q22) and the shallower CTI’s recurring loss than estimated. Note that we treat CTI’s gain from biological assets as an operational item, since CPF doesn’t provide the data for CTI’s biological asset gain/loss.