TKN Jumps 6.7% as Thailand Reopens Border, KTBST Recomm “BUY” at ฿15.40

The share price of Taokaenoi Food & Marketing Public Company Limited (TKN) jumped ฿0.70/share or 6.73% to ฿11.10/share at the opening of the afternoon session on October 22, 2020.

 

The rise in TKN’s share price could be the positive sentiment of the reopen border for foreign arrivals in which the first batch of Chinese tourists arrived on Tuesday under a Special Tourist Visa (STA) for a long-term stay.

The first groups may not be in large numbers, but their arrival will show the readiness of the public health system in Thailand, Yuthasak Supasorn, governor of the Tourism Authority of Thailand (TAT), said on Wednesday.

 

KTB Securities (KTBST) gave a “BUY” recommendation on TKN with a target price at ฿15.40/share as the security company forecasted 3Q20E net profit to grow +48% YoY, +18% QoQ to Bt101mn.

KTBST forecasted 3Q20E net profit of TKN to grow +48% YoY, +18% QoQ to Bt101mn as 1) total revenue is estimated to decline -8% YoY but to increase +5% QoQ to Bt1.17bn  domestic sales are estimated to drop -40% YoY but overseas sales would increase +17% YoY, 2) gross profit margin would widen YoY, QoQ on higher capacity utilization and a full-year benefit from a relatively lower cost of seaweed, and 3) SG&A to sales are expected to decline YoY, QoQ in light of lower marketing expense. KTBST maintained the 2020-21E net profit forecast at Bt382mn (+4%) and Bt545mn (+43%).

TKNs share price outperformed the SET Index by 6% in three months. KTBST believed TKNs brighter 2H20E earnings outlook YoY, HoH will likely continue to provide further support to the share price, which currently trades at an undemanding 2021E PER of 25.2x, or -1.25 SD below its 5-yr average. Although TKNs 2020E earnings are likely to come under pressure from the COVID-19 pandemic, KTBST foresaw strong earnings growth of +43% in 2021E.