TU Outperforms the Market as a Panic-Buy of Canned Tuna Will Increase the Revenue in 2020

TU Outperforms the Market as a Panic-Buy of Canned Tuna Will Increase the Revenue in 2020.

The spreading of coronavirus from human to human caused the government in many countries to lock down the city or even the country, especially Italy which turned to be the new epicenter of the outbreak instead of China.

 

The government told its citizens to stay at home in order to prevent the spread which triggered a panic buying of essential supplies, including canned tuna products.

A surge in demand for canned tuna and other seafood products has turned Thai Union Public Company Limited (TU) into one of the top-performing consumer stocks in Asia this week.

 

Under the “Chicken of the Sea” brand in the U.S. and “John West” in Europe, TU’s stock rose 17% from March 12-19, outperforming the SET Index which was down 6.3% during the period. The analyst believed that the plummet of 4.17% on March 20 was a profit-taking after the share rose higher than anticipated while the outbreak remained a major concern for investors, thus, taking-profit and holding cash might be better.

In 2019, sales in Europe and the USA comprised 67.3% of TU’s total sales while sales in Thailand stood at 12.4%.

 

“The hoarding of canned foods in Europe and the U.S. will continue to boost Thai Union’s sales and earnings,” Benjaphol Suthwanish, an analyst at Asia Wealth Securities Co. (AWS), wrote in a note this week. “The demand in those major markets are expected to remain strong as the Covid-19 outbreak will exist for some time.”

 

Krungsri Securities (KSS) has given a “BUY” recommendation on Thai Union Group Public Company Limited (TU) with a target price at ฿17.50/share.

Besides benefiting from panic buy, Krungsri Securities (KSS) pointed out that TU will benefit from weaker THB against USD and EUR as 75% of revenue is derived from exports. TU said it would buy back up to 200m shares (Bt3b budget), and SSO just bought another 0.025% stake in TU, taking its total stake to 5.014%. Thus, KSS has given a “BUY” recommendation on TU with a target price at ฿17.50/share.

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