TIPCO to Rely on Asphalt instead of Fruit Juice Business?

After experienced a net loss at 30.8 million baht in 2018, for the year 2019, Tipco Foods Public Company Limited (TIPCO) has posted a turnaround to the net profit of 207 million baht. What can assume from this number is that in 2019 TIPCO was at such a good performance to be able to gain an enormous revenue, however, if taking a closer look on the consolidated financial statement, it appeared that total sale and service revenue declined by 16% to 3,561,064,263 million baht from 4,248,050,424 million baht in 2018.

The beverage sale dropped by 13% as the purchasing power within the country has yet to recover, while fruit and vegetable product fall 16%, resulting from lower in selling price, sales volume, and foreign exchange.  

To generate the financial outlook, it showed that 732 million baht of total profit was from the investment in associate, which increased 452% from the previous year. If excluded the incomes of those associate company, TIPCO would remain loss with no doubt.

TIPCO has recognised its majorate amount of profit share from an investment in Tipco Asphalt Public Company Limited (TASCO), the manufacture and distribution of asphalt and petroleum products, in 2019 TASCO net profit jumped 454% to 3,123 million baht, which affected by the increase of external demand. 

In comparison of TIPCO, the associated company, TASCO is likely to has a better liquidity while TIPCO is still challenged by a gradually growth in juice market with an high possibility to sink. TIPCO as well has a double bad luck as the business was threatened by the sugar tax. 

On February 20, 2020, the share price of TIPCO closed at 6.65 baht per share plunged 0.15 baht per share or 2.21% the trading value was at 12.702 million baht which decreased 3 consecutive days 

Some pointed that the share price dropped after the announcement of yearly consolidated financial statement of 2019 because of an unfavourable condition of the market, however, one fact to be reminded is that even TIPCO has finally met its net profit, but it was not from the main business sector such as the fruit and beverage.