The share price of Charoen Pokphand Foods Public Company Limited (SET: CPF) has been on an uptrend as of late as its core business is expected to bounce back in the second half of 2022 from a recovery of the businesses in Vietnam, India as well as Thailand.
CPF once hit a record high at THB34 in July 2020 and had been on a losing side ever since, plunging 25% in three months from its high to THB25.25 per share due to concerns of lower hog price in Vietnam as well as a potential of capital increase to fund CPF for the acquisition of Lotus at the time.
The share price had been traded around upper-mid THB20 since then and only made it above THB30 level a few times in March 2021.
The share price rose 7.6% in a month, but remained flat for the week.
According to the data compiled by Refinitiv, brokers estimated CPF’s revenue to reach pre-Covid level at THB556 billion this year, while the cost of goods sold would rise around 5% compared to last year. Net income is expected to come in at THB15 billion in 2022, which is still lower than THB17 billion of net income in 2019 and THB26 billion in 2020, but will be 22% higher than last year’s net income of THB12 billion.
The consensus target price of CPF is THB25.94 per share with an overwhelmingly 14 “BUY” recommendations, 2 “Hold” and zero “Sell”.
Bualuang Securities (BLS) has given a “BUY” recommendation on CPF with a target price as high as THB32 per share with an expectation of core business to return to profit in the second half of this year.
BLS expected Chia Tai Investment Co., Ltd. (CTI), its corporate in China, to return to profit, following a strong recovery of hog price in China in 2H22 after the price soared 31% from its low of 11.91 yuan in March to 15.62 yuan in May. Meanwhile, the business in Vietnam should be more profitable after the border reopening, seeing a rise by 8% in hog price from March to May. Moreover, the price of live hog in Thailand also saw an increase as well, gaining 20-25% from its low of THB85-88 in Feb-Mar to THB102-110 in May. The performance of its business in India should give lower net loss this year.
In addition, BLS estimated the volume of chicken exports to grow by 10% this year following reopening in Europe and Japan, while global supply also hurts from the war between Russia and Ukraine. Meanwhile, the production capacity of CPF’s factory in Thailand also returns to its pre-Covid level, coupled with a 30-40% increase in exporting poultry prices.
