Equity Analysis /

Thaifoods Group PCL: Scope for an upside to 2022 higher export volume and GM

  • The firm’s 2022 chicken export volume target now revised up

  • The firm’s 2022 sales and GM target to be revised up soon

  • Scope for a huge upside to our 2Q22 earnings forecast

Bualuang Securities
13 June 2022

We think that 2Q22 net and core profits are likely to beat our current expectations significantly, given the locked-in raw material costs through mid-2022, surprisingly robust chicken export volume and higher pork and chicken prices than anticipated. With the new 75k-tonne export volume guidance and the expected record GM for 2022, we think that there is a scope for at least 20% upside to our current 2022 earnings projection. Our TRADING BUY stands, premised on the 2022 earnings jump and its cheap valuation—2022 PER of 12.7x (against its long-term mean of 20.9x).

The firm’s 2022 chicken export volume target now revised up

Due to the tighter Thai pork supply (caused by the ASF outbreak in Thailand) prompting a switch from pork to chicken consumption and a surge in domestic meat demand from the tourism reopening in May-Jun, the firm expects the Thai pork price to sustain above Bt100/kg and chicken price to stay above Bt42/kg. Moreover, it will benefit from the chicken supply disruptions in Europe caused by the Russia-Ukraine war, leading to tighter European and global chicken supply.