Kiatnakin Phatra Securities (KKPS) cut its target price for Betagro Pcl. (SET: BTG) to reflect current meat prices that have yet to fully rebound as expected, and the brokerage firm also reduced its gross profit margin (GPM) forecast for this year to 14%.
Betagro’s target price has been lowered from THB40 to THB30 per share due to the current trend in pork prices; however, the rating remains “BUY” and revenue projections were left unchanged on account of anticipated ongoing volume growth. GPM assumptions have been revised; from 17% in 2022 to 14% in 2023, 16.5% to 15% in 2024, and 16% to 15% in 2025.
The net income of Betagro is anticipated to reach THB3.92 million this year, THB5.469 million in 2024, and THB6.374 million in 2025.
Also, SG&A projections remain unchanged at 10.7%, 10.2%, and 9.8% for 2023, 2024, and 2025, respectively.
Previously, KKPS anticipated that the price of pork would reach its lowest point in March and then begin to rise; however, the price has recently dropped to THB77.5/kg, leaving its prospects uncertain.
Despite the cut, KKPS believes BTG’s share price already more than reflects the slowdown.
Kiatnakin Phatra said in a note released on Monday that Betagro’s GPM may end the year higher than expected if pork price returns back above the THB80/kg. level. But, if the meat price falls below current levels in upcoming quarters, KKPS’s earnings and target price may face downside risk.
