Analysts are still positive on TU after the announcement of its Q3 financials yesterday (6 Nov 2023). Tisco Securities analyst report freshly published today recommends “Buy” TU citing its Q3 financials as better than expected. Even TU’s net profit (YoY) fell, but it still beat QoQ expectations with an increase from Pet Food, Value-Added and better-than-expected margins. Furthermore, Tisco’s analyst expected TU profit to grow in 2024 as negative factors in 2023 are fading out.
Thai Union Group PCL (SET: TU) share price dropped by 23% over the past year, which could be an expectation for weak results for 2023. The 3Q23 net profit fell to ฿1,206 million due to high stock levels during ship shortage in 2022. TU’s 9-month net profit accounts for 73% of the full-year forecast from TISCO. Tisco’s analyst expects TU net profit to decline by 36% YoY in 2023, but 32% YoY growth in 2024 and 7% YoY in 2025, as TU’s 3Q23 financials showed a sign of recovery with QoQ growth and Pet Care impressive margin. However, TU recognized a loss of ฿234 million from profit sharing of its Red Lobster business.
Tisco’s analyst set TU target price at ฿17.7 per share based on P/E ratio of 14x as the historical past 7-year forward P/E while the current price reflects forecasted P/E in 2024 at 10.8x. TU’s P/BV is at 0.7x, a one standard deviation below than forecasted P/BV in 2024.
Meanwhile, CGS-CIMB analyst recommended “Add” TU with target price of ฿17.2 from 10.7x forecasted P/E in 2024 which below 5-year mean of 12x and 4.8% yield. CGS-CIMB cited TU’s Gross Profit Margin (GPM) recovery at +18.4% in 3Q23 and +18.2% in 2Q23, as the material cost on shrimp and tuna are lower, the rightsizing on frozen business results and profit sharing from Avanti. However, the analysts mentioned TU’s key drags which are Red Lobster profit (loss) sharing, higher interest rate, material and labor costs, and low seasonality in Q3.
