On Tuesday at 11:19 AM (Bangkok time), the share price of Charoen Pokphand Foods Public Company Limited (SET: CPF) jumped by 4.21% or THB 0.90 to THB 22.30, with a trading value of THB 307.68 million.
Finansia Syrus Securities (FSS) has reported that China initiated an anti-dumping investigation into pork imports from Europe, which make up an estimated 4.6% of the country’s pork consumption, equivalent to around 58 million tons and roughly half of its total imports.
Should Europe be found guilty and China decides to either decrease imports or raise tariffs on European pork, it is anticipated that the circumstances would be favorable for pork prices. This development is expected to benefit CPF, the sole Thai company engaged in the pork business with China.
Recent data shows that pork prices in China have surged to 18.77 yuan per kilogram, marking a 21% increase from the previous month and surpassing the production costs of 16 yuan per kilogram for over a month. These market conditions are likely to contribute positively to CPF’s performance in the second quarter of 2024, enabling the company to potentially increase its profits from the Chinese market following its successful operations in Thailand and Vietnam.
Yuanta Securities (Thailand) has identified CPF as its top-pick stock, setting a target price of THB 25 per share and highlighting it as a key player among peers within Thailand and the Asia region.
During the second quarter of 2024, domestic pork prices remained steady at THB 70-74 per kilogram, surpassing the production cost range of THB 67-68 per kilogram. Concurrently, regional prices saw an increase driven by the impact of African swine fever (ASF) and a gradual return to normal supply levels in China.
The analyst anticipates a notable profit recovery for food stocks in the second quarter of 2024, attributed to the uptick in average selling prices aligning with a consistent production cost outlook on a quarter-over-quarter basis, and foresees an opportunity for accumulation.
Furthermore, the analyst expects that food stocks will exhibit more dynamic movements than the overall market, given their limited risks to political uncertainties, and maintains an ‘Overperform’ rating for the stocks.
