BRF

The share price of RBF fell ฿0.30/share or 2.54% to close the morning session on Friday at ฿11.50/share with a trading value of 153 million baht. R&B Food Supply Public Company Limited (RBF) had been on a 10-day winning streak, including two flat sessions, from 15 -28 January, representing a 35.6% increase. The stock hit a record high at ฿12.60/share during yesterday’s session, but closed slightly lower from the peak. Analysts anticipated that the recent rally was due to a speculation of the company to be able to produce cannabis beverages in the future after the Thai FDA approved hemp as a component in cosmetic products. TRIS Rating assigned the company rating of BBB+ to RBF with a stable rating outlook. The rating reflects RBFs long track record in the food ingredient industry with technical expertise, research and development (R&D) capabilities, continuing growth with diversified and innovative products, and a strong financial profile. These strengths are partially offset by the company's small earnings base, moderate threat of new entrants in the market, and the risk inherent in overseas investment. Kasikorn Securities (KS) stated that cannabis indica and cannabis sativa will be the main ingredient to produce CBD oil for medical use, but would take time to grow the plant after the approval. Thus, KS expected cannabis-contained beverage will be trendy in 2022. BRF, as an upstream and downstream CBD oil producer, would generate upside to its profit in 2022 around 4-11% from producing CBD oil. KS expected an upside around 6-14% to RBF’s current target price at ฿9.40/share. Meanwhile, Finansia Syrus Securities (FSS) expected RBF to record an increase of net profit in 4Q20 by 87% when compared to the previous year due to higher orders without any impact from the Covid-19 outbreak. As for 2020 and 2021 earnings, FSS estimated an increase of 41% and 22%, respectively, which benefited from the approval of cannabis indica and cannabis sativa that will be finalized in 2H21. In addition, FSS recommended “BUY” on RBF with a target price at ฿12.00/share.