Analysts Expect CPF’s Profit to Hit Record High of ฿7.6Bn in 1Q, Recomm. “BUY” at ฿45.25

Analysts Expect CPF's Profit to Hit Record High of ฿7.6Bn in 1Q, Recomm. “BUY” at ฿45.25

CPF’s net profit is expected to record an all-time high in 1Q21 from rising swine prices and a full-quarter shared profit from CTI-Lotus. The analyst estimated CPF to report 1Q21 earnings of 7,644 million baht, growing 25% YoY, and will continue its growth in 2Q21. Therefore, the analyst has given a “BUY” recommendation on CPF and a target price of ฿45.25/share


Capital Nomura Securities (CNS) foresaw Charoen Pokphand Foods Public Company Limited (CPF) in 1Q21 to make an all-time high net profit of 7,644 million baht, a 25% growth YoY, from rising swine prices in Thailand, Vietnam, Laos and Cambodia, and higher pet food sales in China. Moreover, the pig price in China was as high as CNY30 per kilo compared to the cost of CNY17.


For the year 2021 outlook, CNS expected CPF’s earnings to grow YoY driven by 1) a rebound in swine-chicken prices in Thailand to offset cost of pet foods, 2) feed material cost reduction from production improvement, 3) revenue contribution from swine business in China, 4) an increase in swine capacity in Thailand, Vietnam and China, and 5) shared profit from CPALL.


Maybank Kim Eng (Maybank) estimated CPF’s 1Q21 profit to rise 7% QoQ and 6% YoY to 6.81 billion baht, due to a 47% QoQ, 62% YoY rise projection in share of profits from associates to 4.34 billion baht thanks to the full-quarter recognition of CTI investment that is engaged in integrated swine business in China (acquired Dec-20). Swine price in China is holding up well, 1Q21 average at RMB30/kg (down 10% YoY). In addition, CTI is rolling out expansion that will bring up its capacity from 4.5 million heads in 2020 to 6-7 million heads by the end of this year. 


Therefore, Maybank reiterated the “BUY” call with a SoTP-based target price of ฿45.25/share, comprising of CPF (฿28.12) based on 12x PER (-1SD of average PE) and CPALL (฿17.13) based on DCF (WACC 7.2%, LTG 4%).