Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Equity Bottom-Up

<div><div><div><ul><li>We maintain our Neutral call. Although the valuation metrics suggest that the short-term fundamentals are unattractive, the long-term growth prospects are promising.</li><li>We have a neutral tactical view in the medium term, with a new 2024E fair price of Bt20.80 (based on the earnings yield and a required rate of return of 3. 23%).</li><li>We cut the 2023E forecast to a loss and revised down earnings in 2024-25E by 9-10%.</li></ul></div></div></div>

We maintain our Neutral call. Although the valuation metrics suggest that the short-term fundamentals are unattractive, the long-term growth prospects are promising.We have a neutral tactical view in the medium term, with a new 2024E fair price of Bt20.80 (based on the earnings yield and a required rate of return of 3. 23%).We cut the 2023E forecast to a loss and revised down earnings in 2024-25E by 9-10%.

Charoen Pokphand Foods - Expect 2024E Earnings to Turn Around from Loss in 2023E

<ul><li>CPF reported a 2Q23 net loss of Bt792mn, better than our projection of a net loss of Bt2.1bn due to higher-than- expected extra gain of Bt3.0bn vs. our estimate of Bt1.4bn.</li><li>Excluding the extra items, the firm reported a core loss of Bt3.8bn, missing our projection calling for a core loss of Bt3.5bn.</li><li>The core loss of Bt3.8bn in 2Q23 was much worse than the core profit of Bt1.5bn in 2Q22 and in line with the amount in 1Q23.</li></ul>

CPF reported a 2Q23 net loss of Bt792mn, better than our projection of a net loss of Bt2.1bn due to higher-than- expected extra gain of Bt3.0bn vs. our estimate of Bt1.4bn.Excluding the extra items, the firm reported a core loss of Bt3.8bn, missing our projection calling for a core loss of Bt3.5bn.The core loss of Bt3.8bn in 2Q23 was much worse than the core profit of Bt1.5bn in 2Q22 and in line with the amount in 1Q23.

Earnings Review - Charoen Pokphand Foods Plc. (CPF) - August 15, 2023

<div><div><div><ul><li>KTX initiates our coverage on CPF with a Neutral rating (2024E fair value of Bt21.37/share based on the earnings yield and a required rate of return of 3.5%).</li><li>Our valuation metrics suggest that the decline in the share price has already factored in the challenging 1H23E and 2023E outlooks.</li><li>Therefore, the tactical downside risk is limited, while the short-term and long-term views are neutral.</li></ul></div></div></div>

KTX initiates our coverage on CPF with a Neutral rating (2024E fair value of Bt21.37/share based on the earnings yield and a required rate of return of 3.5%).Our valuation metrics suggest that the decline in the share price has already factored in the challenging 1H23E and 2023E outlooks.Therefore, the tactical downside risk is limited, while the short-term and long-term views are neutral.

Charoen Pokphand Foods (CPF TB) - 2H23E Earnings to Recover HoH; 2024E Core Profit to Grow 4.3x

Thematic (Sector/Industry)

<div><div><div><div><ul><li>We propose a new set of global plays in accordance with the de- globalization trend, shifting the allocation toward Asia-based companies with better growth prospects than those that generate the bulk of their revenue in Western markets.</li><li>Our recommended stocks are CBG and SCGP.</li><li><div><div><p>The global economy is less synchronized than in the past, meaning that a global plays strategy should be more area focused to enhance the growth potential.</p></div></div></li></ul></div></div></div></div>

We propose a new set of global plays in accordance with the de- globalization trend, shifting the allocation toward Asia-based companies with better growth prospects than those that generate the bulk of their revenue in Western markets.Our recommended stocks are CBG and SCGP.The global economy is less synchronized than in the past, meaning that a global plays strategy should be more area focused to enhance the growth potential.

Changing Landscape for Global Plays - Shifting the Allocation of Global Plays Toward Asia

<p>CPF’s 2Q21 core profit came in below the forecast due to a higher-than- expected effective tax rate and a lower-than-expected profit contribution from affiliates. Hence, we have revised down our 2021-22E core profit projections by 22% and 13%, respectively, leading to a new target price of Bt39/share (15x PER). The 3Q is the peak export season, and the firm’s earnings are expected to recover QoQ in line with meat prices. CPF’s current share price implies a PER of 8.8x for 2021E. We reaffirm our Buy call.</p>

CPF’s 2Q21 core profit came in below the forecast due to a higher-than- expected effective tax rate and a lower-than-expected profit contribution from affiliates. Hence, we have revised down our 2021-22E core profit projections by 22% and 13%, respectively, leading to a new target price of Bt39/share (15x PER). The 3Q is the peak export season, and the firm’s earnings are expected to recover QoQ in line with meat prices. CPF’s current share price implies a PER of 8.8x for 2021E. We reaffirm our Buy call.

Company Update Charoen Pokphand Foods Plc. (CPF)

Thailand

Charoen Pokphand Foods Public Company Limited produces a wide range of food products. The Company's products include chicken, pork, shrimp, fish, eggs. and duck.

CP FOODS (CPF TB)

Charoen Pokphand Foods - Expect 2024E Earnings to Turn Around from Loss in 2023E

We maintain our Neutral call. Although the valuation metrics suggest that the short-term fundamentals are unattractive, the long-term growth...

Krungthai XSpring

Earnings Review - Charoen Pokphand Foods Plc. (CPF) - August 15, 2023

CPF reported a 2Q23 net loss of Bt792mn, better than our projection of a net loss of Bt2.1bn due to higher-than- expected extra gain of Bt3.0bn vs....

Krungthai XSpring

Charoen Pokphand Foods (CPF TB) - 2H23E Earnings to Recover HoH; 2024E Core Profit to Grow 4.3x

KTX initiates our coverage on CPF with a Neutral rating (2024E fair value of Bt21.37/share based on the earnings yield and a required rate of...

Krungthai XSpring

Changing Landscape for Global Plays - Shifting the Allocation of Global Plays Toward Asia

The global economy is less synchronized than in the past, meaning that a global plays strategy should be more area focused to enhance the growth...

Krungthai XSpring

Company Update Charoen Pokphand Foods Plc. (CPF)

Downbeat 2Q21 earnings; 2021-22E earnings revised down, CPF’s current share price implies a PER of 8.8x for 2021E. We reaffirm our Buy call.

Krungthai XSpring