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>Negative view from the analyst meeting: TU revised down its 2023E sales and GPM targets as well as the Capex plan.</li><li>While we expect HoH earnings improvement in 2H23E due to seasonality (but a YoY decline due to the high base of Bt2.5bn in profit in 3Q22 and Bt1.2bn in 4Q22), the likelihood of sustained high tuna prices and lower demand (with a gradual improvement in only some markets) will impede the firm’s profitability.</li><li>Although the current share price implies limited downside risk, we do not see any potential upside. </li></ul></div></div></div>

Negative view from the analyst meeting: TU revised down its 2023E sales and GPM targets as well as the Capex plan.While we expect HoH earnings improvement in 2H23E due to seasonality (but a YoY decline due to the high base of Bt2.5bn in profit in 3Q22 and Bt1.2bn in 4Q22), the likelihood of sustained high tuna prices and lower demand (with a gradual improvement in only some markets) will impede the firm’s profitability.Although the current share price implies limited downside risk, we do not see any potential upside. 

Analyst Briefing - Thai Union Group Plc. (TU) - August 9, 2023

<ul><li>TU reported a 2Q23 net profit at Bt1.0bn (-37% YoY, +1% QoQ). The earnings fell YoY because of a decline in sales as well as a dilution effect after ITC was listed to the SET.</li><li>The 2Q23 earnings beat our forecast by 25% as the GPM of 16.9% was better than our estimate of 16.2%.</li><li>Operating expenses to sales marked at 11.7%, lower than the expectation of 12.6% (approximately Bt400mn), and credit tax expenses exceeded our expectation (by around Bt100mn).</li></ul>

TU reported a 2Q23 net profit at Bt1.0bn (-37% YoY, +1% QoQ). The earnings fell YoY because of a decline in sales as well as a dilution effect after ITC was listed to the SET.The 2Q23 earnings beat our forecast by 25% as the GPM of 16.9% was better than our estimate of 16.2%.Operating expenses to sales marked at 11.7%, lower than the expectation of 12.6% (approximately Bt400mn), and credit tax expenses exceeded our expectation (by around Bt100mn).

Earnings Review - Thai Union Group Plc. (TU) - AUGUST 8, 2023

<ul><li>We have a negative view on the information obtained from the recent analyst meeting.</li><li>The earnings outlook in 1Q23E seems gloomy, with the firm revising down its sales growth and gross profit margin targets.</li><li>This led us to trim our 2023-24E core profit projections by 4.6% and 4.8%, respectively.</li></ul>

We have a negative view on the information obtained from the recent analyst meeting.The earnings outlook in 1Q23E seems gloomy, with the firm revising down its sales growth and gross profit margin targets.This led us to trim our 2023-24E core profit projections by 4.6% and 4.8%, respectively.

Thai Union Group - 2023-24E Earnings Forecasts Revised Down

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>TU’s 2Q21 core profit came out in line with our expectation. Earnings were boosted by the recovery in the frozen/chilled seafood business and the pet food and value-added product business, along with better contributions from affiliates (as Red Lobster shared a smaller loss YoY). The 3Q21E earnings are likely to remain intact YoY and QoQ due to the peak season and the depreciation of the baht. We reaffirm a Hold rating, with the target price of Bt20.60 (14x PER).</p>

TU’s 2Q21 core profit came out in line with our expectation. Earnings were boosted by the recovery in the frozen/chilled seafood business and the pet food and value-added product business, along with better contributions from affiliates (as Red Lobster shared a smaller loss YoY). The 3Q21E earnings are likely to remain intact YoY and QoQ due to the peak season and the depreciation of the baht. We reaffirm a Hold rating, with the target price of Bt20.60 (14x PER).

Thailand

Thai Union Group Public Company Limited provides frozen and canned seafood products. The Company offers seafood products including tuna, sardines, mackerel, herring, and salmon. Thai Union Group serves customers worldwide.

Thai Union Group (TU-R TB)

Analyst Briefing - Thai Union Group Plc. (TU) - August 9, 2023

While we expect HoH earnings improvement in 2H23E due to seasonality (but a YoY decline due to the high base of Bt2.5bn in profit in 3Q22 and...

Krungthai XSpring

Earnings Review - Thai Union Group Plc. (TU) - AUGUST 8, 2023

TU reported a 2Q23 net profit at Bt1.0bn (-37% YoY, +1% QoQ). The earnings fell YoY because of a decline in sales as well as a dilution effect...

Krungthai XSpring

Thai Union Group - 2023-24E Earnings Forecasts Revised Down

The earnings outlook in 1Q23E seems gloomy, with the firm revising down its sales growth and gross profit margin targets.

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

Earnings Review: Thai Union Group Plc.

Strong 2Q21 earnings growth on better sales and margin, TU’s 2Q21 core profit came out in line with our expectation, we reaffirm a Hold rating

Krungthai XSpring