The message from TU’s management is conveyed clearly that strong YoY growth momentum is likely to carry through at least 1H21, driven by sustained solid ambient seafood and pet care sales, back-to-growth frozen seafood sales and shallower Red Lobster (RL) loss. We reiterate a BUY rating on TU, based on its sustained strong 1H21 earnings growth and its cheap valuation—2021 PER of 10.4x against its long-term PER mean of 13.6x.
Strong growth momentum to continue at least for 1H21
Management is confident that its good performance of ambient seafood sales will continue at least for 1H21, led by the rising consumption of canned seafood. The frozen seafood sales will recover further in 2021, fueled by the opening of more food services which will increase demand for frozen seafood (depending on the COVID-19 situation in 2021). Demand for pet care products will remain strong due to the continued launches of new and innovative products on the market. RL will post a shallower loss in 2021, led by US food service recovery. It confirms that a stronger YoY rise will continue in 4Q20 through 1Q21.