CPF Expects 20% Growth in 2021 from Tesco-China’s Swine, Analyst Recomm. “BUY” at ฿39.5

The Chief Executive Officer of Charoen Pokphand Foods Public Company Limited (CPF), Mr. Prasit Boondoungprasert, revealed that in 2020, CPF reported a net profit of 26,022 million baht, an increase of 41% from 18,456 million baht last year, and EBITDA was at 81,692 million baht, a 72% increase from last year, due to the use of AI technology in manufacturing, along with innovations despite the Covid-19 crisis and African swine fever (ASF) outbreak.

 

Company’s profitability also improved significantly, thanks to a rising swine price in Asia (particularly in China and Vietnam), a better operating result in aquaculture farming business, a well-managed cost and quality control, coupled with new technologies and innovations adopted in manufacturing and distribution.  

 

Even though the Covid-19 epidemic has led to economic disruption and dampened overall purchasing power, however, products of CPF are still essential for life. Therefore, CPF has mitigated impact by increasing customers’ access and distribution channels along with adjusting work processes and utilizing more technological tools. 

 

Mrs. Kobboon Srichai, CPF’s Secretary, said that revenue from sales for the year 2020 was 589,713 million baht, an increase of 11% from 532,573 million baht last year as the result of a 15% increase in sales from oversea operation to 409,143 million baht and 3% increase in Thailand operations to 180,570 million baht, mainly driven by swine business in Asia and shrimp business in Thailand. Overall, the revenue from domestic sales accounted to 31% of total revenue, while the revenue from overseas accounted to 69%.

 

In addition, the Board of Directors Meeting of CPF has approved the proposal of the dividend payment from operating results of the year 2020 at 1.00 baht per share in total. In this regard, CPF already paid the first dividend payment to shareholders as an interim dividend at 0.40 baht per share on September 11, 2020. Therefore, the second dividend payment will be 0.60 baht per share which has set the record date for the right to receive the second dividend on May 18, 2021 and the dividend payment will be made on May 28, 2021. 

 

Mr. Prasit stated that with the anticipation of a better purchasing power and Covid-19 outbreak this year, CPF expected a global demand recovery which will enhance food exports. Though the company is confident to deliver an improving performance in 2021.

 

Kingsford Securities, overall, had a positive view towards CPF’s 2021F, foreseeing a demand will recover from Covid-19 pandemic, while pointing that African swine fever outbreak in China and Vietnam will maintain swine prices in high levels. Furthermore, Kingsford believed Tesco and Chia Tai Investment Co., Ltd. (CTI) will drive CPF’s earnings in 2021 up by 10-20%, recommending “BUY” with a target price of ฿39.50/share.