On Friday at 10:30 AM (Bangkok time), the share price of Thai Coconut Public Company Limited (SET: COCOCO) slumped by 6.78% or THB 0.60 to THB 8.25, with a trading value of THB 145.97 million.
DAOL Securities (Thailand) maintains a “Buy” recommendation for COCOCO but adjusts the target price down to 11.50 baht per share from the previous 15.00 baht following the revision of earnings estimates. This follows the company’s report of a 4Q24 net profit of 84 million baht, down 55.8% YoY and 51.4% QoQ, attributed to a decrease in Gross Profit Margin (GPM) and rising raw material costs.
Revenue from sales was recorded at 1.73 billion baht, up 23.6% YoY but down 9.8% QoQ due to declining demand in the Chinese, U.S., and European markets, in addition to raw material challenges. In addition, the average GPM decreased to 17.5% due to raw material shortages.
However, there was strong export sales growth in Africa, the Middle East, Europe, Asia, and America. Selling, General and Administrative expenses (SG&A) increased by 42.9% YoY due to higher employee and product R&D expenses.
The net profit estimate for 2025 has been revised down by 25% to 868 million baht, a 30% YoY increase from the previous 1,157 million baht estimate. The 2024 profit was 667 million baht, a 31% increase from 2023’s 511 million baht. Revenue growth prospects remain positive due to the expansion of distribution channels and customer base, but GPM growth may be challenging without increasing production capacity.
COCOCO share prices have underperformed the market recently due to concerns over raw material prices and exchange rates, which could pressure 4Q24 performance.
Similarly, Pi Securities noted that COCOCO reported a 4Q24 net profit of 84 million baht, a 56% YoY decrease. After excluding special items, the normalized profit was 71 million baht, down 62% YoY and 70% QoQ, significantly below both market and the analyst’s expectations, despite tax benefits. The YoY profit decline resulted from a contracting GPM, reaching its lowest point since market entry, even though sales grew well by 24% YoY.
As the company’s 1Q25 performance is expected to weaken YoY, in the short term, the analyst recommends investors utilizing the “Profit-taking” strategy at a base value of 7.60 baht.
Currently, there are initial signs of declining coconut prices month-over-month in January 2025. It is advised to wait for signs of GPM recovery in the second half of 2025, as the La Niña condition, which leads to cooler weather and increased rainfall, is expected to boost coconut production.
