XO Surges 4% in Anticipated Earnings to Reach New High in 2Q21, Analyst Recomm. “BUY”

The share price of Exotic Food Public Company Limited (XO) closed 3.86% higher to ฿21.50/share in the morning session on Tuesday, July 29, with a trading value of 129 million baht.

KGI Securities (KGI) projects XO’s to report a 2Q21 net profit of 138.7 million baht (+50.9%YoY, +32.3%QoQ). Earnings should continue to show impressive growth on the back of strong revenue expansion especially from Europe. Thai sauce export data showing growth continued in 2Q21 suggests demand was strong despite less benefit from home cooking  during the global lockdown. 

Meanwhile, the company has efficiently managed costs, resulting in a consistently high GPM of 45.6%. XO’s plan to launch new hemp sauce products looks promising and could be an upside risk in 2022F. KGI maintains a rating of Outperform on XO with a 2022 target price of 32.75 baht and expects the company to announce an interim dividend of 0.29 baht per share for its 1H21 operating period.

Finansia Syrus Securities (FSS) recommends “Speculative-Buy” rating on XO in anticipation of a net profit of 138 million baht in 2Q21 (+50%YoY, +31.4%QoQ), which is better than FSS’s previous prediction, due to a continued strong demand for its Thai sauce products. As a result, revenue from sales should hit a record high of 435 million baht despite a container shortage, citing that the situation is still manageable and will have effect on total income less than 3% .

Meanwhile, KTBST Securities (KTBST) maintains a “BUY” recommendation on XO, but raises a target price to 26 baht (from 18 baht), based on 2021E PER at 23x (equivalent to 5-yr average PER).

KTBST is positive about XO’s guidance, as the company’s management team increased its 2021 earnings projection to 30%-40% growth and forecasted continued revenue growth in 2Q21. Additionally, the new sales strategy, which includes a listing fee, has yielded results faster than anticipated, with orders started in the first quarter of this year.