Equity Analysis /

GFPT PCL: Indirect beneficiary of Thai pork up-cycle

  • Super-high Thai pork price expected through Chinese New Year

  • Thai chicken—the indirect beneficiary of pork supply shortage

  • Upgraded 2022 net profit and target price

Bualuang Securities
10 January 2022

We believe that GFPT stands to gain from the abnormally high Thai pork price caused by the existing Thai pork supply shortage situation, as some consumers will switch from pork to chicken. In light of this, we have upgraded our GFPT’s byproduct sales price assumptions, its 2022 net profit and target price. Our TRADING BUY rating stands premised on the strong 2022 earnings jump.

Super-high Thai pork price expected through Chinese New Year

Despite the government’s measure of suspending pork exports for three months effective Jan 6 to combat the record Thai pork price surge, the Thai live pig price has so far remained high in a range of Bt103-105/kg. On Jan 7, the mean provincial Thai pork price was Bt105/kg—Ratchaburi province (Bt100/kg) and Nakhon Pathom province (Bt110/kg)—while the Bangkok pork price was Bt103/kg. There has been no sign of price weakening so far. The suspension of pork exports will have a modest impact on the industrywide pork supply given that: 1) pork exports of 1m head represents only 17% of the live pig herd shortfall of 6m head in 2022 and 2) the super-high price of Bt80-100/kg has prompted pork operators to sell domestically rather than export for quite some time due to the fatter margin on domestic sale. We expect the super-high Thai pork price to sustain through at least the Chinese New Year in light of the current Thai pork supply shortage situation.