Stocks in Focus on December 30, 2019: CPF

Kaohoon Online has selected stocks with a potential of high growth for investors to consider on December 30, 2019.

 

Asia Wealth Securities (AWS) has given a “BUY” recommendation on Charoen Pokphand Foods Public Company Limited (CPF) with a target price at ฿31.00/share.

The data from the Office of Agricultural Economics showed the situation of domestic pork and chicken prices recovering. Pork price in December (MTD) is at Bt69 per kilogram, up by 15%MoM and up by 8%YoY. Chicken price in December (MTD) is at Bt40 per kilogram, up by 8%MoM and up by 25%YoY.

AWS expects CPP Hong Kong performance (accounting for 40% of CPF revenue) to increase QoQ significantly. It is part of the epidemic African swine fever (ASF) in Vietnam and China causing the pork supply to continuously shortage. We see a recovery of pork prices in Vietnam and China. Pork prices in Vietnam in October (data from CPF) was at 54,547 dongs per kilogram, up by 30%MoM and up by 6%YoY. Latest, pork price in Vietnam (data from Asian Agribiz) is around 74,000 dong per kilogram. Currently, pork prices in China (data from China Swine) is at 50 yuan per kilogram, increasing from August and September at 33 yuan per kilogram and 38 yuan per kilogram, respectively.

AWS expects CPF business in 2020 will be better due to the continuously increasing price of pork in Thailand, China, and Vietnam. Recommend BUY with a target price in 2020 at Bt31.00, based on 16xPER.

CPF is likely to have a downtrend due to the Monthly Sell Signal, but the price has resumed to become strong in the short and medium-term due to the occurrence of both Daily & Weekly Buy Signal with the next target of Bt29.00 and the important target of Bt32.00, respectively. CPF has a short-term stop-loss point at Bt25.50. (Resistance: 27.75, 28.25, 28.50; Support: 27.25, 27.00, 26.50).