RBF: Strong Performance and Resilience Are Already Priced In
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.
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