bearish
RBF: Recent Jump in Share Price Leads to Overvaluation
SUMMARY
We initiate coverage on RBF with a SELL recommendation based on a target price of Bt8.70, implying a downside of 13% from the current price. We derive our target price from a 20% premium to the 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
Risks: Slowdown in consumer spending, increased competition, delays and disruptions in production, failure to introduce innovative products, loss of large customers.
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