RBF Surges 6% after Receiving a Big Hemp-Cannabis Order from Inter Pharma

RBF’s share surges 6% to 20.10 baht, analyst believes the hemp business will be a long-term growth driver for RBF, recommending “BUY” with a target price of 26.50 baht.

The share price of R&B Food Supply Public Company Limited (RBF) rose ฿1.10/share or 5.76% to ฿20.20/share as of 11:20 local time in Thailand, with a trading value of 343 million baht.

On September 7, 2021, RBF and Inter Pharma Public Company Limited (IP) entered into a Memorandum of Understanding regarding the research, development, and expansion of  production of hemp and cannabis products as permitted under applicable law. In this regard, RBF will develop and sell hemp extracts and cannabis to IP.  

Notwithstanding, this Memorandum of Understanding is effective for a period of 1 year from the signing date.

KGI Securities believes the hemp business will be a long-term growth driver for RBF due to the wide range of usage including in food, beverage, cosmetics, and animal products. There is also a possibility for export once production costs decrease enough to be competitive. Another growth driver would be expansion abroad, especially in high growth potential markets such as Indonesia and Vietnam. RBF has already expanded its food coating production bases in these two countries. 

KGI reiterates its positive view on RBF’s growth outlook and expects earnings CAGR of 52% in 202262023. KGI also maintains a rating of Outperform with a 2022 target price of 26.50 baht, based on PER 52.0x (PEG 1.0x).

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