Although we slashed our 2022 earnings forecast to factor in the ongoing impact of sustained high feed costs in 1H22 as a result of the Russia-Ukraine war, we foresee that its core earnings are likely to recover strongly in 2H22 in anticipation of lower feed costs. Our TRADING BUY stands led by the 2H22 core earnings recovery.
Insights into 1Q22—shallower QoQ core loss anticipated
We model a Bt120m net profit for 1Q22, down 98% both YoY and QoQ. Excluding (1) the net biological asset gain and trading gain from CPALL shares in 1Q22; (2) the huge gains arisen from the Entire Business Transfer (EBT) transactions for CPF, CPALL and MAKRO and other extra items worth altogether Bt9.74bn shares in 4Q21 and (3) the FX items, we model a Bt1.84bn 1Q22 core loss, against a Bt6.83bn 1Q21 core profit but shallower by 60% QoQ. Our new core profit forecast is weaker than our previous Bt500m core profit due to a further rise in raw material costs related to the prolonged Russia-Ukraine war crisis.