CPF-TU to Benefit from Weak Baht, Analysts Recomm. “BUY” on a Rising Earnings Forecast

CPF–TU to benefit from Thai baht depreciation and hemp unlocking, analysts forecast both companies are continuing their momentum in 2021, recommending “BUY” CPF at ฿42.20/share and TU at ฿18.60/share.

 

The baht closed at ฿30.83 to the US dollar on March 19, weakening from ฿29.90 at the beginning of this year, analysts believe this issue will be positive for stocks in export sector particularly food products such as Charoen Pokphand Foods Public Company Limited (CPF) and Thai Union Group Public Company Limited (TU).

 

Krungsri Securities (KSS) assessed that softer Thai baht tone will benefit both TU and CPF, moreover, the two companies will also derive positive sentiment from plans to launch hemp products, recommending “BUY” on TU and CPF with a target price of ฿18.00/share and ฿42.20/share, respectively. 

 

As the Covid-19 pandemic has triggered people to stockpile foodstuffs especially in European where it is one of TU’s largest export partners, together with economic recovery, KSS believes it would drive up TU’s revenue and earnings in 2021. 

 

Meanwhile, the growth of CPF this year is expected to be driven by higher swine prices due to a shortage of pork from african swine fever (ASF) outbreak in China and Vietnam, and CPF also has a plan to improve swine production both in Thailand and China. Moreover, swine and chicken prices remain firm. 

 

Additionally, KSS foresees a larger profit contribution from subsidiaries to CPF, especially CPALL with full-year consolidation of TESCO Lotus.

 

Country Group Securities (CGS) has given a “BUY” rating on TU with a target price of ฿18.60/share on expectation of continued growth this year as demand for canned food remains positive amid ongoing pandemic.