Our TRADING BUY stands. Despite the 2021 earnings cut, we believe that its 3Q21 nadir is likely to be followed by a QoQ rise in 4Q21 and a robust upscaling of earnings in 2022 bolstered by the full reopening.
Undershot our model significantly
TFG posted a 3Q21 net loss of Bt456m, a reversal from net profits of Bt1.06bn in 3Q20 and Bt430m in 2Q21. Excluding five extra items in 3Q21—Bt89m FX loss, Bt118m loss on biological assets, Bt23m in asset impairment expense, Bt9m loss from a change in fair value of financial assets and Bt2m loss from the land value appraisal—it posted a Bt213m core loss, a reversal from core profits of Bt994m in 3Q20 and Bt325m in 2Q21. Net and core losses missed our expectations of Bt480m net profit and Bt380m core profit for 3Q21, thanks to a significantly lower GM and higher SG&A expenses than modeled. GM of 4.1% in 3Q21, or the lowest since 2Q18, was significantly lower than our 11% estimate and the 17.4% in 3Q20 and 11.5% in 2Q21.