CGS International Securities (Thailand) (CGSI) has a positive view on the acquisition of CPF on CPP, expecting the investment to generate incremental earnings for CPF.
The analyst cited management’s guideline for a 30% YoY growth for CPP in 2025. The additional 23.8% stake could contribute around 3 billion baht earnings incremental to CPF.
The THB 37 billion investment will raise CPF’s IBDE ratio but still below the covenant of 2x, which remains within a manageable level.
The analyst noted that this full ownership enhances CPF’s flexibility in managing CPP’s operations in China and Vietnam while supporting sustainable earnings growth.
CGSI added that additional information from a call with CPF’s management indicated that the investment will be fully financed through debt, leading to an interest expense of approximately 1.6 billion baht (applying CPF’s average COD of 4.3%).
As a result, the net impact on CPF’s earnings from this transaction is expected to be around THB 1.5 billion, which represents roughly 7.5% of the consensus 2025F’s earnings.
The securities company viewed this as part of the restructuring process ahead of CPF’s plan to list CPP on the Vietnamese stock market.
Additionally, the THB 37 billion investment implies a PER of about 12x, slightly higher than 2024 PER of 11x and the consensus 2025F PER of 10.5x for CPF.
Yesterday, Charoen Pokphand Foods Public Company Limited (SET: CPF) announced an acquisition of 6,017,959,308 shares in C.P. Pokphand Co., Ltd. (CPP), representing 23.8% of issued shares, from ITOCHU Corporation.
The company announced that the Board of Directors’ Meeting convened on April 21, 2025, resolved to approve CPF Investment Limited (a wholly owned subsidiary of CPF) to acquire investment in C.P. Pokphand Co., Ltd., or “CPP”, in the amount of 6,017,959,308 shares (representing 23.8% of the total issued shares of CPP) for a total consideration of USD 1.1 billion (approx. 37 billion baht) from ITOCHU Corporation.
As a result, CPF Group’s shareholding in CPP will increase from 76.2% to 100%, which will result in an increase in CPF’s net profit from the increased investment in CPP and a better return on equity. In addition, being the sole shareholder will allow CPF to have greater flexibility in management and be able to carry out strategic operations more effectively.
The investment value has been determined based on a valuation conducted by CPF’s financial advisor, using various internationally recognized methodologies. These include the Discounted Cash Flow (DCF) method, as well as the Market Comparable Approach, which involves comparing market ratios of companies in the same industry, e.g. the Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization (EV/EBITDA) ratio, the Price-to-Earnings (P/E) ratio, and other relevant methods.
