TU edged 3% higher at the opening on Monday, September 20, 2021, after the company acquired 10% of the shares in RBF.
As of 10:27 local time in Thailand, the share price of Thai Union Group Public Company Limited (TU) rose ฿0.20/share or 0.92% to ฿22.00/share, with a trading value of 519 million baht.
Kasikorn Securities (KS) views that TU interests in RBF’s CBD business and this could add more value to Pet food business. In the long term when Thai hemp price is competitive to the global market, TU’s global footprint could enhance further demand from RBF products.
This transaction could create noise to RBF’s stock price in ST. But KS believes that this would highlight RBF’s growth prospects and its leading position in the food ingredient market. Maintain Outperform with a target price of 22.00 baht.
KS is positive on the deal as the selling price is c.20% discount to the current RBF’s price. While RBF’s earning growth outlook is strong with 34% CAGR in 2021-23 and know how about CBD from hemp and other food ingredients which RBF has expertise.
With Net D/E at 0.98x at end-2Q21 and cash on hand of c.6.0 billion baht, KS has no concern on TU’s financial position as the company to complete the transaction. As only 10% investment in RBF, KS expects the impact on TU’s P/L statement should be small.
For TU, KS maintains Outperform on the stock with 2022 target price of 26.90 baht. In addition to this market talk, KS believes the recent THB depreciation should benefit TU as a food exporter.