TU Jumps 6.5% to Bt17.90, CNS Recomm. “BUY” at Bt20 on Strong Recovery in U.S. and Europe

The share price of Thai Union Group Public Company Limited (TU) rose ฿1.10/share or 6.55% to close the morning session on May 11, 2021, at ฿17.90/share with a trading value of 1,191 million baht. The surge came after the company reported a 77% YoY increase in 1Q21 earnings.

 

Capital Nomura Securities (CNS) has given a “BUY” recommendation on TU with a target price at ฿20.00/share, citing TU’s strong 1Q21 results, especially on the gross profit margin that was higher than anticipated as well as lower interest rate.

The increase of normalized profit in YoY would be due to higher GPM of tuna, frozen products and animal feeds. However, lower normalized profit compared to QoQ would be due to the seasoning of low volume and margin in tuna and frozen business units.

CNS expected TU to record 6,825 million baht of profit in 2021, representing an increase of 7% YoY from a recovery in the frozen products business as well as the Red Lobster that would have lower loss. Meanwhile, the vaccination in the U.S. and Europe has more than 50% in progression, resulting in a recovery in economic activity. 43% total revenue proportion of TU is in the U.S. and 27% is in Europe.

In addition, the current valuation is traded on PER21 at 12x and PBV21F at 1.4x.