Equity Analysis /

Charoen Pokphand Foods: Laggard play in the Thai pork up-cycle

  • Insights into 3Q22—YoY turnaround; a QoQ big jump in core profit

  • CTI’s 3Q22 turnaround; a big jump in 3Q22 China’s pork price

  • Minor impact from flooding and Vegetarian Festival on prices

Bualuang Securities
7 October 2022

CPF’s YoY core earnings turnaround in 3Q22 should be mirrored in 4Q22 with strong YoY growth momentum seen throughout 1H23, bolstered by stronger Thai and Chinese pork and Thai chicken prices. We believe that CPF is a laggard play on the Thai pork up-cycle theme.

Insights into 3Q22—YoY turnaround; a QoQ big jump in core profit

We now model a Bt4.68bn net profit for 3Q22, a YoY turnaround and up 11% QoQ. Excluding the FX item, loss from biological assets and gain from trading CPALL shares, we estimate a Bt4.51bn 3Q22 core profit, a YoY turnaround and QoQ jump of 36%. The YoY core operational turnaround is attributed to: 1) a hike in pork prices in Thailand (up 49% YoY), China (up 55%), Vietnam (up 23%), Laos (up 78%), Malaysia (up 54%) and Philippines (up 31%), 2) a robust leap in chicken prices in Thailand (up 54% YoY), Vietnam (up 106%), Laos (up 59%), Philippines (up 52%), Cambodia (up 28%), Malaysia (up 19%) and Taiwan (up 18%), 3) the turnaround of CTI (CPF’s China-based pork affiliate), 4) CPP’s huge loss reduction, 5) India turnaround (improved shrimp unit from bigger sales volume and better cost management) and 6) a jump in CPALL’s equity income (from low 3Q21 base), outweighing rising losses of Bellisio and HyLife and the rise in overall raw material costs.