ASIAN-TU Rally in the Morning Session as Thai Baht Falls

ASIAN and TU rallied in the morning session of Wednesday, September 8, 2021, as Thai baht fell.

As of 12:10 local time in Thailand, the share price of Asian Sea Corporation Public Company Limited (ASIAN) rose ฿0.90/share or 5.17% to ฿18.30/share, with a trading value of 429 million baht.

Meanwhile, the share price of Thai Union Group Public Company Limited (TU) rose ฿1.00/share or 4.98% to ฿21.10/share, with a trading value of 1,047 million baht.

KTBST Securities holds a “BUY” rating on ASIAN and a target price of 24.00 baht. The company said its expansion plan remains intact with the capacity increases of 2,000/1,300 tons per year in the pre-fried (+25%)/pet food (+3%) businesses in 3Q21 and 4,700 tons per year, or up +10% YoY, in the pet food business in 2022E. KTBST maintains 2021E/2022E net profit forecast at 1.09 billion baht (+33% YoY)/1.13 billion baht (+3%) as 1) revenue  would  grow +9%/+6% given the pre-fried/pet food’s capacity expansion, and 2) gross profit margin would increase to 18.5% in 2021E but to narrow slightly to 18.0% in 2022E in  expectation of baht  appreciation. 

KTBST believes ASIAN’s earnings upcycle will run its course into 2022E in light of the growing demand for pet food and the upcoming plant-based food business, apart from capacity expansion.  

Finansia Syrus Securities views TU as an inventive company, not a tuna company, because the company is accelerating its development of innovative products for human and animal consumption. The proportion of revenue generated by this new business is gradually increasing, enabling the company to reduce its dependency on tuna revenue. Thus, FSS anticipates that TU’s earnings in 2021-22 will increase by 19% YoY and 3% YoY, respectively.

Additionally, TU aims to maximize the value of its business by spinning off the animal food sector in 4Q21 and 3Q22, and the investments under the ESG concept have already started to see tangible positives. FSS has given a “BUY” rating on TU with a target price of 30.00 baht.