KTBST Expects CPF to Benefit from Covid-19 Outbreak at Seafood Market, Recomm. TP at ฿39

KTB Securities (Thailand) (KTBST) has given a “BUY” recommendation on Charoen Pokphand Foods Public Company Limited (CPF) with a target price at ฿39.00/share, emphasizing the beneficiary of rising demand for pork and chicken after the coronavirus outbreak in Samut Sakhon’s seafood market.

 

KTBST stated that CPF is a prime beneficiary given rising demand for chicken and pork after news reported the COVID-19 outbreak has spread from Myanmar workers in Samut Sakhon’s seafood market. The domestic retail swine price has increased +2.7% to Bt75.50/kg (as of December 23) from Bt73.50 (December 21), while the ex-factory price has stayed flat at Bt68.00/swine. Broiler price has also maintained at Bt35.00/kg

 

Adding to positive factors to swine price is a tight supply condition in the swine market in the aftermath of the ASF outbreak. KTBST expected the ex-factory price to increase if people continue to avoid seafood due to misunderstanding of COVID-19 infection. Broiler price will likely remain roughly flat given a short life cycle of about three months, compared to 9-11 months of swine lifecycle.

 

KTBST maintained its 2020-21E profit forecast to grow significantly +31% to Bt24bn and core profit to jump +67% to Bt21bn. In 2021E, core profit would increase a further +8% to Bt23bn given its investment expansion in China-based swine business, which should support its feed ingredient business, and high livestock prices in the regional market.