Equity Analysis /
Thailand

Thaifoods Group PCL: The cheapest Thai livestock play

  • Bullish view reiterated on tightening pork supply through 2023

  • Sustained high day-old chick prices and stronger byproduct prices

  • Sustained high prices and bigger sales volume—key drivers in 2023

Bualuang Securities
15 December 2022

With the sustained high livestock prices, enhanced volume growth from capacity expansion, the break-even of its retail shops and the lower freight costs in 2023, we expect 2023 earnings to rise YoY. Its valuation is very cheap—PER of 6x against its 8.1x in Jun 2022.

Bullish view reiterated on tightening pork supply through 2023

Management remains bullish that the Thai pork price will sustain high at Bt97-98/kg in 2023 (flattish or down slightly YoY). The re-emergence of African Swine Fever (ASF) during 2Q22-3Q22 as a result of the rainy season and flooding will lead to the sustained low level of the national sow pig herd at 30-35% below the pre-ASF level. It expects the pig supply to resume the pre-ASF level in 2024. Assuming our conservative scenario, we expect the pork supply to remain tight through mid-2023 and expect only marginal pork supply from small-scale pork operators to enter the market in 2H23 (due to the sustained high feed costs).