CPF prepared to increase the target price to THB 29 from THB 28, forecasting 2H profit recovery thanks to higher pig and chicken prices in China and Vietnam, while animal feed remained low.
Charoen Pokphand Foods Public Company Limited (SET: CPF) performance in 2H24 is expected to grow from increasing chicken and hog prices and lower operational costs, according to InnovestX Securities Co. Ltd., (INVX).
The securities company maintained “Outperform” rating for CPF, and adjusted the target price for the middle of 2025 using the SOTP method at THB 29 from THB 28 per share, citing the second half of 2024 growth prediction from increasing selling price of chicken and hog along with lower feed costs.
During 2H24, hog prices overseas were predicted to go up, especially in China and Vietnam, where the price reached its highest in two years. The jump in hog prices is largely due to the lack of supply following the new African Swine Fever (ASF) outbreak in China during the middle of 2024 and Vietnam during 3Q24.
In Thailand, the price of land animals will remain high, with 3Q24 seeing chicken and hog prices grow 4% from last year, almost reaching a year high.
Meanwhile, 2H24 saw animal feed costs remaining low, with 3Q24 animal feed spot prices hardly changed from last quarter.
Meanwhile, the third quarter corn spot prices grew 6% from the same quarter last year, and a 13% increase from the previous quarter of this year, as a result of low supply from being out of the corn season, which starts in September. The cost of importing soybean meal and wheat barn dropped 3% and 17% from the same quarter last year respectively, owing to higher yield in 2024/2025 from harvesting, according to USDA the animal feed prices will remain low.
On 2H24, the skipjack tuna estimated spot price will remain low, since August saw the skipjack tuna spot price reaching its lowest in three years due to better catch, despite the fact that West Pacific has entered no FAD period. The price of skipjack tuna is likely to remain low for the next couple of months and will return to normal within late 2024.
Additionally, INVX considered CPF a top pick, expecting normalized profit to reach its best in 3Q24, supported by strong prices of land animals from both domestically and overseas. Moreover, CPF will largely benefit from the coming rate cuts, while barely affected by higher wages and strong baht compared to its peers.
