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.

Thematic (Sector/Industry)

<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>The international trade account in July recorded a deficit of USD1.37bn, reversing from the surplus of USD0.22bn in June.</li><li>However, exports experienced the largest expansion in 28 months, growing by 15.2% YoY.</li><li>This positive performance is benefiting high-growth export stocks such as rubber producers (STA and NER), processed fresh chicken producers (CPF, GFPT, and TFG), canned seafood producers (TU), and pet food producers (AAI and ITC). </li></ul>

The international trade account in July recorded a deficit of USD1.37bn, reversing from the surplus of USD0.22bn in June.However, exports experienced the largest expansion in 28 months, growing by 15.2% YoY.This positive performance is benefiting high-growth export stocks such as rubber producers (STA and NER), processed fresh chicken producers (CPF, GFPT, and TFG), canned seafood producers (TU), and pet food producers (AAI and ITC). 

Equity Bottom-Up

<ul><li>The 2Q24 core profit beat our forecast. KTX remains bullish about the 2024E core profit growth outlook, which is expected to leap by 30% due to the stoppage of the loss realization from RL.</li><li>Consequently, the long-term earnings growth outlook is strong, with expected three-year earnings showing a 15% CAGR.</li><li>The share price implies upside of around 7%, while the tactical downside risk is limited. </li></ul>

The 2Q24 core profit beat our forecast. KTX remains bullish about the 2024E core profit growth outlook, which is expected to leap by 30% due to the stoppage of the loss realization from RL.Consequently, the long-term earnings growth outlook is strong, with expected three-year earnings showing a 15% CAGR.The share price implies upside of around 7%, while the tactical downside risk is limited. 

Thai Union Group - 2Q24 Core Profit Fell 10% YoY but Increased 35% QoQ

<ul>
<li>We maintain a neutral outlook on the 2Q24E earnings.</li>
<li>We anticipate a 10% YoY decline in core profit but a 35% QoQ increase, driven by higher tuna selling prices and increased sales volume, particularly from growing demand in the US and the Middle East due to seasonality.</li>
<li>In addition, improved utilization rates and baht depreciation are expected to boost sales and margins both YoY and QoQ, causing operating expenses to rise compared to both periods.</li>
</ul>


We maintain a neutral outlook on the 2Q24E earnings.
We anticipate a 10% YoY decline in core profit but a 35% QoQ increase, driven by higher tuna selling prices and increased sales volume, particularly from growing demand in the US and the Middle East due to seasonality.
In addition, improved utilization rates and baht depreciation are expected to boost sales and margins both YoY and QoQ, causing operating expenses to rise compared to both periods.


Thai Union Group - Expect 2Q24E Core Profit to Drop 10% YoY but Rise 35% QoQ

<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

Thai Union Group Public Company Limited produces and exports frozen and canned seafood products including frozen tuna loin, shrimp and cephalopod. The Company also produces canned pet foods from by products of its seafood process.  Additionally, the Company produces fish snack and canned tuna which are marketed locally.

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Thai Union Group (TU TB)

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

Exports in July 2024 Hit a 28-Month High

The international trade account in July recorded a deficit of USD1.37bn, reversing from the surplus of USD0.22bn in June.

Krungthai XSpring

Thai Union Group - 2Q24 Core Profit Fell 10% YoY but Increased 35% QoQ

The 2Q24 core profit beat our forecast. KTX remains bullish about the 2024E core profit growth outlook, which is expected to leap by 30% due to the...

Krungthai XSpring

Thai Union Group - Expect 2Q24E Core Profit to Drop 10% YoY but Rise 35% QoQ

We maintain a neutral outlook on the 2Q24E earnings. We anticipate a 10% YoY decline in core profit but a 35% QoQ increase

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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