Finansia Syrus Securities (FSS) forecasts that Charoen Pokphand Foods Public Company Limited (SET: CPF) will announce a normal profit of THB 7.2 billion in the third quarter of 2024, marking a 4.7% growth from the previous quarter. This performance signifies a significant turnaround from a loss in the third quarter of 2023 and represents the highest level of profitability in 16 quarters.
The positive momentum is driven by the uptick in meat prices both domestically and globally, coupled with reduced raw material expenses, which bode well for the company’s gross profit margin outlook.
However, during 4Q23 to the present, meat prices have shown a decline, with chicken prices dropping by 10% QoQ. Pork prices experienced a slight decrease due to factors such as the Vegetarian Festival and flood situations, while China’s pork prices registered an 11% contraction QoQ.
These developments have resulted in a forecasted dip in CPF’s profit for the fourth quarter of 2024 compared to the preceding quarter, mainly due to the impact of lower meat prices and the onset of a low season.
The analyst has lifted the company’s projected normal profit for 2024 by 26% to THB 17 billion. However, there has been a downward revision in the 2025 normal profit forecast by 16% to THB 14 billion. These adjustments mirror a cautious stance regarding the anticipated decrease in meat prices.
Therefore, FSS gives a ‘BUY’ recommendation for CPF, with a target price of THB 28 per share.
Meanwhile, Tisco Securities also shares the same view, expecting a robust quarter for CPF with projected net profit in 3Q24 of THB 7.05 billion. The company’s revenue is anticipated to surge by 8% YoY and 5% QoQ, attributed to enhanced market conditions in Thailand, Vietnam, and other regions. The growth is propelled by heightened swine prices in Vietnam, resulting from decreased supply following the African Swine Fever outbreak last year.
Tisco Securities maintains a ‘BUY’ recommendation for CPF, setting a target price at THB 29.50 per share.
