Chetthaphon Dutsadeenoad, Director of Food Moment Public Company Limited (SET: FM), revealed that Japan’s Ministry of Environment raised the severity of bird flu to the highest level after a deadly strain of bird flu was detected in two cities in Hokkaido prefecture on 16 October 2024. The company saw an opportunity to export more Thai chicken to Japan to fill the gap.
Japan imports around one million tons of chicken. Thailand has exported approximately 46% of its chicken to Japan. In 2023 FM chicken accounted for 33% of chicken exports to Japan, while in 1H24 the company chicken accounted for 29% of overall export so far. In 4Q24 FM will deliver processed chicken to customers in Korea, with said Korean customers in exporting the chicken product to Japan and Europe, which Chetthaphon believes may indirectly benefit Thai export as well.
FM will retain its goal of expanding the export ratio to 65% within 3 years from the company’s current 50%. As of 4Q24, FM chicken production capacity has improved by 19% using the same machine, although the company’s slaughter capacity has risen to 130,000 chickens per day from 110,000 per day. Additionally, the company has increased process chicken production capacity to 27,000 tons, as the company believes in a boost in sales.
In an overview of FM’s 2024 performance, the company reaffirmed that the earnings will grow roughly 25-30% from last year’s total earnings of THB 5,791 million since the company saw its earnings reach THB 3,646.29 million in 1H24. Recently the company has invested in expanding its production capacity according to its plan, while also expanding into new markets as well.
FM’s strategy for future growth is as follows:
- Increase the value of its processed chicken products that have higher profit margins, while investing in new technology and innovation to keep the product up-to-date and healthy, and satisfy the consumer and customer, which will help the company sell the product with a continuously growing profit margin.
- Devise a plan to reinforce its production efficiency and produce zero wastage, which will strengthen the profit margin from food waste products, and a plan to enter into the animal feed market, and improve the company’s profit margin further.
- An expansion into a new region, while preserving its existing customer base, by maintaining product quality, diversity, and values for the company’s consecutive growth.
- More emphasis on the company’s human resources by investing in hiring and improving its employee’s skills to enhance the company’s businesses and efficiently react to the market and customer demand.
- Improves the raw material supply chain and the production method to support steady growth and favorable profit margin.
Koraphat Vorachet, Division Head of Research from Krungsri Securities, commented that due to the severe bird flu epidemic in two cities of Hokkaido prefecture in Japan, Thailand chicken exporters could greatly benefit from the event by exporting more chicken to fill the gap in the Japanese market.
Thailand’s top chicken exporter to Japan, GFPT Public Company Limited (SET: GFPT) is believed to greatly benefit from Japan’s bird flu panic. The securities recommend a “Speculative Buy” at the target price of THB 17 per share. Thailand’s second largest exporter to Japan, Charoen Pokphand Foods Public Company Limited (SET: CPF) is recommended at the target price of THB 27-28 per share. Both the stocks (GFPT and CPF) are expected to perform well while benefiting from the incident in Japan, therefore the securities recommend buying both stocks.
