TISCO Securities Looks at GFPT Stocks
Company aims for 5-8% Revenue Growth by 2023F
TISCO Securities has their sights set on GFPT stocks as they maintain their revenue target of a 5-8% increase by 2023F. In recent months, there has been an encouraging rise in income, creating an opportunity for Q3/66F. The feed business and farm business are expected to see a QoQ increase, while the chicken business anticipates improved exports from China as tourism opens up. However, weakened value of the Yen in Japan and negotiations with European countries for lower prices due to reduced shipping costs have posed challenges.
Chicken Prices Face Seasonal Drop
Currently, the chicken price stands at 36.5 baht, marking the lowest drop this year. Considering the onset of the rainy season, the company predicts an average of 38-40 baht/kg for the full year, slightly lower than last year’s average of 42.5 baht/kg. The costs of soybeans and cornmeal remain high despite some reduction, owing to the directive by the Minister of Trade to lower the prices of Rice-Chicken-Egg-Pork. This move, initiated after reducing diesel fuel prices, has caused pork and chicken prices to fall. Additionally, illegal pork and falling energy costs continue to impact the market price. Given these challenges, the company contemplates the possibility of seeking cooperation to lower the prices of certain products.
Q3/66F Net Profit Trend
Despite a YoY decrease, Q3/66F net profit trend has potential for QoQ growth, surpassing previously expected stability. The rise in the farm business has led to sales returning to pre-Covid levels of 150,000 birds per day from 130,000 birds per day. Similarly, the land animal feed business has experienced growth while a slight increase is expected in the food business. Moreover, the margin rate is anticipated to improve QoQ as the cost of corn and soybean meal begins to decrease. The research department maintains its forecast for 2023-24F, with an expected 8% decline in exports this year. Net profit is projected to be 1,294 million baht (-37% YoY) and 1,382 million baht (+7% YoY), based on selling price estimates of 40 baht/kg, soybean meal price estimated at 22.5 baht, and the price of corn for animal feed estimated at 13.40 baht, taking into account climate fluctuations that affect production.
Recommendation Shifts to “Buy”
Following a 20% drop in stock price as of early July 2023, the research department has changed its recommendation to “Buy” as an opportunity for stock accumulation. This adjustment reflects the weaker year-over-year operating results in the past, with expectations of continued improvement beyond the low point in Q1/66. With a low PER66F of only 10X, the target price of 13.50 baht is based on an average PER of 13X, coupled with 66F’s Dividend Yield of 2.1%.
Risk: Chicken prices and costs are subject to fluctuations.
#Currently on stocks – TISCO Securities is looking at GFPT stocks The company maintains its revenue target for 2023F to increase by 5-8% During the months of July-August, income has improved, providing an opportunity to Q3/66F. QoQ of the feed business and farm business returns to increase. As for the chicken business, exports from China are expected to improve due to the opening of tourism. With the exception of Japan, which weakened from the falling value of the Yen. and European countries have negotiated lower prices due to reduced shipping costs.
As for the current chicken price, it is 36.5 baht, the lowest drop this year. Due to entering the rainy season The company expects a full year average of 38-40 baht/kg from last year’s average of 42.5 baht/kg It is unlikely to be lower than this. This is due to the high costs of soybeans and cornmeal, although they have fallen somewhat. Due to the Minister of Trade ordering a reduction in the price of Rice-Chicken-Egg-Pork To be clear at the beginning of October after reducing the price of diesel fuel. The company considers it quite difficult. Due to the current situation, pork and chicken prices are falling. Costs are still high despite some adjustments. In addition, there is still a problem with illegal pork which drives the market price down. And falling energy costs account for only a small proportion of the costs. The company sees that it may be more likely to ask for cooperation in lowering the prices of some products.
Q3/66F net profit trend decreased YoY, but has opportunity to increase QoQ from QoQ previously expected to be stable. Due to the increase in the farm business, the sales returned to the pre-covid normal at 150,000 birds per day from 130,000 birds per day and the land animal feed business has returned to increase. As for the Food business , is expected to increase slightly. In addition, the margin rate is expected to improve QoQ, with the cost of corn and soybean meal starting to decrease. The research department maintains the same forecast for 2023-24F, expecting exports this year to fall by 8%. Net profit is expected to be 1,294 million baht (-37% YoY) and 1,382 million baht (+7% YoY), respectively, from Selling price estimates at 40 baht/kg Soybean meal price is expected to be 22.5 baht and the price of corn for animal feed is expected to be 13.40 baht due to climate fluctuations affecting production.
The research department changed the recommendation to “Buy” as an opportunity to accumulate stocks. From the current stock price, it is down 20% as of early July 2023, reflecting weak year-over-year operating results. that has come in the past and the trend in Q3/66F is expected to continue to improve past the low point in Q1/66, together with PER66F which is only 10X low, the target price is 13.50 baht, based on PER at an average of 13X, 66F’s Dividend Yield is at 2.1 % cRisk Chicken prices and costs vary.
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