Equity Analysis /

Thai Union Group PCL: Weaker 4Q22 earnings expectations—a short-term blip

  • Modest YoY sales rise anticipated for 4Q22

  • Pet care and ambient seafood units to lead the 4Q22 sales growth

  • GM in 4Q22 expected to drop both YoY and QoQ

Bualuang Securities
20 January 2023

Despite weaker 4Q22 earnings forecast and our slight downgrade for TU’s 2022 and 2023 earnings and target price, our TRADING BUY stands, based on the 2023 earnings upside from Red Lobster (RL)’s shallower loss and the SG&A reduction via lower freight costs.

Modest YoY sales rise anticipated for 4Q22

We model Bt40.08bn in sales for 4Q22, up a modest 4% YoY (weaker THB/USD average and the further rise in sales prices), but down 2% QoQ (low season and the high 3Q22 base for both ambient seafood and pet care and value-added products). Its 4Q22 sales growth will decelerate YoY (against 15% YoY growth in 3Q22). Despite the rapid THB/USD appreciation (from Bt38.33/USD on Oct 14 to Bt33.1/USD on Jan 19), its 4Q22 mean was Bt36.33/USD, weaker 9% YoY but stronger 0.2% QoQ. The YE22 rate was Bt34.61/USD (against Bt37.85/USD at end-3Q22).