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.