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>We like RBF for being in the supply chain of a variety of consumer products, especially food and beverage products (i.e., trendy, healthy food), along with its superior profitability.</li><li>Therefore, we have raised our 2020-21E core profit forecasts by 9-10%, resulting in a new target price of Bt7.75/share (25x PER).</li><li>We lift our rating to Hold (from Sell) to reflect bright outlook and expected dividend yield of 3%.</li></ul>

We like RBF for being in the supply chain of a variety of consumer products, especially food and beverage products (i.e., trendy, healthy food), along with its superior profitability.Therefore, we have raised our 2020-21E core profit forecasts by 9-10%, resulting in a new target price of Bt7.75/share (25x PER).We lift our rating to Hold (from Sell) to reflect bright outlook and expected dividend yield of 3%.

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

We keep our HOLD recommendation on RBF and reduce our target price to Bt8.70 from Bt9.25, implying a downside of 8% from the current price. We derive our target price from a 30% premium to the 2021E PB/ROE ratio of Asia ex Japan Consumer Staples due to RBF’s resilient business model.
Investment thesis:
<ul>
<li>Aggressive expansion to capture overseas growth opportunities, but already priced in</li>
<li>Strengthened relationship to Japanese partner enables profit boost</li>
<li>Improved raw material management enhances cost-efficiency</li>
</ul>
Interim: A strong 3Q20 YoY where revenue grew by 21%, and gross profit margin expanded 2.2 ppts. We adjust our overall gross margin forecast upward but stay cautious about high growth opportunities in the long run.
Risks: Slowdown in consumer spending, increased competition, delays and disruptions in production, failure to introduce innovative products, loss of large customers.

We keep our HOLD recommendation on RBF and reduce our target price to Bt8.70 from Bt9.25, implying a downside of 8% from the current price. We derive our target price from a 30% premium to the 2021E PB/ROE ratio of Asia ex Japan Consumer Staples due to RBF’s resilient business model.
Investment thesis:

Aggressive expansion to capture overseas growth opportunities, but already priced in
Strengthened relationship to Japanese partner enables profit boost
Improved raw material management enhances cost-efficiency

Interim: A strong 3Q20 YoY where revenue grew by 21%, and gross profit margin expanded 2.2 ppts. We adjust our overall gross margin forecast upward but stay cautious about high growth opportunities in the long run.
Risks: Slowdown in consumer spending, increased competition, delays and disruptions in production, failure to introduce innovative products, loss of large customers.

RBF: Strong Performance and Resilience Are Already Priced In

<ul><li>We like RBF for being in the supply chain of a variety of consumer products and its superior profitability.</li><li>However, the share price now implies demanding 2020-21E PER of 38x and 34x vs. expected two-year earnings growth at a 20% CAGR and the 2021E target price of Bt7.00 (25x PER).</li><li>We therefore reaffirm our Sell rating.</li></ul>

We like RBF for being in the supply chain of a variety of consumer products and its superior profitability.However, the share price now implies demanding 2020-21E PER of 38x and 34x vs. expected two-year earnings growth at a 20% CAGR and the 2021E target price of Bt7.00 (25x PER).We therefore reaffirm our Sell rating.

Upbeat 3Q20 Earnings but Demanding Valuation

<ul><li>We still like RBF's business for its strong presence in the demand-supply chain for consumer goods and its good profit margin.</li><li>We project its two-year core profit growth at a 20% CAGR.</li><li>Therefore, we maintain a Sell rating and the target price of Bt7.00/share (25x PER).</li></ul>

We still like RBF's business for its strong presence in the demand-supply chain for consumer goods and its good profit margin.We project its two-year core profit growth at a 20% CAGR.Therefore, we maintain a Sell rating and the target price of Bt7.00/share (25x PER).

We upgrade our recommendation on RBF to HOLD from SELL based on raising our target price of 9.25 from Bt8.70, implying a downside of 9% from the current price. We derive our target price from a 20% premium to the 2020-21E PEG ratio of Thai Consumer Staples due to RBF’s resilient business model.
Investment thesis:
<ul>
<li>Aggressive expansion to capture overseas growth opportunities, but already priced in</li>
<li>Strengthened relationship to Japanese partner enables profit boost</li>
<li>Improved raw material management enhances cost-efficiency</li>
</ul>
Interim: As expected, the 2Q20 results underline RBF’s resiliency during an economic downturn. Given the substantial revenue and net profit growth, we become a bit more optimistic for 2020E-2021E, but we still miss a catalyst for further outperformance.
Risks: Slowdown in consumer spending, increased competition, delays and disruptions in production, failure to introduce innovative products, loss of large customers

We upgrade our recommendation on RBF to HOLD from SELL based on raising our target price of 9.25 from Bt8.70, implying a downside of 9% from the current price. We derive our target price from a 20% premium to the 2020-21E PEG ratio of Thai Consumer Staples due to RBF’s resilient business model.
Investment thesis:

Aggressive expansion to capture overseas growth opportunities, but already priced in
Strengthened relationship to Japanese partner enables profit boost
Improved raw material management enhances cost-efficiency

Interim: As expected, the 2Q20 results underline RBF’s resiliency during an economic downturn. Given the substantial revenue and net profit growth, we become a bit more optimistic for 2020E-2021E, but we still miss a catalyst for further outperformance.
Risks: Slowdown in consumer spending, increased competition, delays and disruptions in production, failure to introduce innovative products, loss of large customers

RBF: The Excessive Outperformance May Come to a Halt

Thailand

R&B Food Supply Public Company Limited manufactures and trades in bread products, colors, fragrances, and chemicals utilized in the food, beverage, and consumer product industries. The company also produces and sells products under its own brands, including Uncle Barns', Best Odour, and Super-Find. It is headquartered in Bangkok, Thailand, and was founded in 1989.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

R&B Food Supply (RBF TB)

Strong Margin and Financial Position

We like RBF for being in the supply chain of a variety of consumer products, especially food and beverage products (i.e., trendy, healthy food),...

Krungthai XSpring

RBF: Strong Performance and Resilience Are Already Priced In

We keep our HOLD recommendation on RBF and reduce our target price to Bt8.70, implying a downside of 8%. We derive our target price from a 30%...

A. Stotz Investment Research

Upbeat 3Q20 Earnings but Demanding Valuation

We like RBF for being in the supply chain of a variety of consumer products and its superior profitability. However, the share price now implies...

Krungthai XSpring

Good Margin But Demanding Valuation

We still like RBF's business for its strong presence in the demand-supply chain for consumer goods and its good profit margin. We project its...

Krungthai XSpring

RBF: The Excessive Outperformance May Come to a Halt

Given the substantial growth, we become a bit more optimistic for 2020E-2021E, but we still miss a catalyst for further outperformance.

A. Stotz Investment Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)