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

<ul><li>3Q24 profit declined YoY and QoQ due to lower sales and margins. The 2024E outlook appears weak, with profit expected to decrease by 17%.</li><li>The current fundamental view has been upgraded to buy (previously undervalued), as the stock price decline leaves upside of approximately 10% from the fair value.</li><li>The tactical view is maintained as neutral, and the long-term outlook remains unappealing. </li></ul>

3Q24 profit declined YoY and QoQ due to lower sales and margins. The 2024E outlook appears weak, with profit expected to decrease by 17%.The current fundamental view has been upgraded to buy (previously undervalued), as the stock price decline leaves upside of approximately 10% from the fair value.The tactical view is maintained as neutral, and the long-term outlook remains unappealing. 

R&B Food Supply - 3Q24 Net Profit Declined YoY but Improved QoQ

Thematic (Sector/Industry)

<ul>
<li>The combination of the Vegetarian Festival and the school holiday break is anticipated to exert downward pressure on broiler and swine prices in October, with expected declines of around 2-5%, based on the five-year historical trend.</li>
<li>Typically, broiler and swine prices rebound by 5-16% in 1Q of the following year.</li>
<li>For 3Q24E, companies in the meat sector, particularly those focused on swine in Thailand, Vietnam, and China, are expected to see strong YoY and QoQ profit growth, with earnings reports anticipated within the first 15 days of November. </li>
</ul>


The combination of the Vegetarian Festival and the school holiday break is anticipated to exert downward pressure on broiler and swine prices in October, with expected declines of around 2-5%, based on the five-year historical trend.
Typically, broiler and swine prices rebound by 5-16% in 1Q of the following year.
For 3Q24E, companies in the meat sector, particularly those focused on swine in Thailand, Vietnam, and China, are expected to see strong YoY and QoQ profit growth, with earnings reports anticipated within the first 15 days of November. 


Agribusiness and Food and Beverage Sectors - October 4, 2024

<ul><li>In 3Q24E, the earnings of the agribusiness and food sector are expected to recover both YoY and QoQ, particularly for major meat operators with swine businesses in Thailand, Vietnam, and China.</li><li>Their earnings are anticipated to turn around from losses in 3Q23 to profits in 3Q24E, with momentum expected to continue growing QoQ.</li><li>KTX has revised up its earnings projection for TFG but lowered the projection for RBF, as its 3Q24E earnings are expected to decline YoY and QoQ. </li></ul>

In 3Q24E, the earnings of the agribusiness and food sector are expected to recover both YoY and QoQ, particularly for major meat operators with swine businesses in Thailand, Vietnam, and China.Their earnings are anticipated to turn around from losses in 3Q23 to profits in 3Q24E, with momentum expected to continue growing QoQ.KTX has revised up its earnings projection for TFG but lowered the projection for RBF, as its 3Q24E earnings are expected to decline YoY and QoQ. 

Agribusiness and Food and Beverage Sectors - Sep 5, 2024

<ul><li>Weak sales growth has negatively impacted profitability, leading us to revise down our earnings projections by 33-40%.</li><li>As a result, earnings growth over the next three years is expected to remain stable, signaling that the long-term growth outlook is no longer compelling.</li><li>We are waiting for positive developments in the recovery of high-margin product sales to offset the declining sales in China.</li></ul>

Weak sales growth has negatively impacted profitability, leading us to revise down our earnings projections by 33-40%.As a result, earnings growth over the next three years is expected to remain stable, signaling that the long-term growth outlook is no longer compelling.We are waiting for positive developments in the recovery of high-margin product sales to offset the declining sales in China.

R&B Food Supply - Earnings Forecasts Revised Down to Reflect Weak Sales and GPM

<ul><li>The projected outlook for agricultural and food businesses in 2Q24E indicates a notable recovery both YoY and QoQ.</li><li>In particular, major meat operators, including those engaged in the swine business in Vietnam, are anticipated to shift from losses in 2Q23 to profits, with further growth expected from their reported better-than- expected operating results in 1Q24.</li><li>Consequently, we have revised our profit forecasts upward for CPF, TFG and SAPPE. While acknowledging the sector's rebound in operating results, driving up share prices, we maintain a Neutral rating due to stretched valuations, as indicated by the earnings yield method. </li></ul>

The projected outlook for agricultural and food businesses in 2Q24E indicates a notable recovery both YoY and QoQ.In particular, major meat operators, including those engaged in the swine business in Vietnam, are anticipated to shift from losses in 2Q23 to profits, with further growth expected from their reported better-than- expected operating results in 1Q24.Consequently, we have revised our profit forecasts upward for CPF, TFG and SAPPE. While acknowledging the sector's rebound in operating results, driving up share prices, we maintain a Neutral rating due to stretched valuations, as indicated by the earnings yield method. 

Agri & Food: Momentum in 2Q24E Expected to Grow YoY and QoQ

Thailand

R&B Food Supply Public Company Limited operates as a food company. The Company manufactures breadcrumbs. R&B Food Supply serves customers in Thailand.

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R&B Food Supply PCL (RBF TB)

R&B Food Supply - 3Q24 Net Profit Declined YoY but Improved QoQ

3Q24 profit declined YoY and QoQ due to lower sales and margins. The 2024E outlook appears weak, with profit expected to decrease by 17%.

Krungthai XSpring

Agribusiness and Food and Beverage Sectors - October 4, 2024

The combination of the Vegetarian Festival and the school holiday break is anticipated to exert downward pressure on broiler and swine prices in...

Krungthai XSpring

Agribusiness and Food and Beverage Sectors - Sep 5, 2024

In 3Q24E, the earnings of the agribusiness and food sector are expected to recover both YoY and QoQ, particularly for major meat operators with...

Krungthai XSpring

R&B Food Supply - Earnings Forecasts Revised Down to Reflect Weak Sales and GPM

As a result, earnings growth over the next three years is expected to remain stable, signaling that the long-term growth outlook is no longer...

Krungthai XSpring

Agri & Food: Momentum in 2Q24E Expected to Grow YoY and QoQ

In particular, major meat operators, including those engaged in the swine business in Vietnam, are anticipated to shift from losses in 2Q23 to profits

Krungthai XSpring

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