Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Thematic (Sector/Industry)

<ul><li>The projected outlook for agricultural and food businesses in 2Q24E indicates a notable recovery both YoY and QoQ.</li><li>In particular, major meat operators, including those engaged in the swine business in Vietnam, are anticipated to shift from losses in 2Q23 to profits, with further growth expected from their reported better-than- expected operating results in 1Q24.</li><li>Consequently, we have revised our profit forecasts upward for CPF, TFG and SAPPE. While acknowledging the sector's rebound in operating results, driving up share prices, we maintain a Neutral rating due to stretched valuations, as indicated by the earnings yield method. </li></ul>

The projected outlook for agricultural and food businesses in 2Q24E indicates a notable recovery both YoY and QoQ.In particular, major meat operators, including those engaged in the swine business in Vietnam, are anticipated to shift from losses in 2Q23 to profits, with further growth expected from their reported better-than- expected operating results in 1Q24.Consequently, we have revised our profit forecasts upward for CPF, TFG and SAPPE. While acknowledging the sector's rebound in operating results, driving up share prices, we maintain a Neutral rating due to stretched valuations, as indicated by the earnings yield method. 

Agri & Food: Momentum in 2Q24E Expected to Grow YoY and QoQ

<ul><li>The Thai swine industry is anticipated to face continued challenges this year, though not as severe as the difficulties encountered in 2023.</li><li>During that period, major operators experienced losses due to rising costs and declining prices, exacerbated by an influx of illegal swine supply and further compounded by sluggish consumption.</li><li>In 1H24E, domestic swine supply is projected to stabilize, with excess supply gradually diminishing.</li></ul>

The Thai swine industry is anticipated to face continued challenges this year, though not as severe as the difficulties encountered in 2023.During that period, major operators experienced losses due to rising costs and declining prices, exacerbated by an influx of illegal swine supply and further compounded by sluggish consumption.In 1H24E, domestic swine supply is projected to stabilize, with excess supply gradually diminishing.

Meat Sector – Thai Swine Prices to Recover in 2H24E

Equity Bottom-Up

<div><div><div><ul><li>Negative view from the analyst meeting: TU revised down its 2023E sales and GPM targets as well as the Capex plan.</li><li>While we expect HoH earnings improvement in 2H23E due to seasonality (but a YoY decline due to the high base of Bt2.5bn in profit in 3Q22 and Bt1.2bn in 4Q22), the likelihood of sustained high tuna prices and lower demand (with a gradual improvement in only some markets) will impede the firm’s profitability.</li><li>Although the current share price implies limited downside risk, we do not see any potential upside. </li></ul></div></div></div>

Negative view from the analyst meeting: TU revised down its 2023E sales and GPM targets as well as the Capex plan.While we expect HoH earnings improvement in 2H23E due to seasonality (but a YoY decline due to the high base of Bt2.5bn in profit in 3Q22 and Bt1.2bn in 4Q22), the likelihood of sustained high tuna prices and lower demand (with a gradual improvement in only some markets) will impede the firm’s profitability.Although the current share price implies limited downside risk, we do not see any potential upside. 

Analyst Briefing - Thai Union Group Plc. (TU) - August 9, 2023

<ul><li>TU reported a 2Q23 net profit at Bt1.0bn (-37% YoY, +1% QoQ). The earnings fell YoY because of a decline in sales as well as a dilution effect after ITC was listed to the SET.</li><li>The 2Q23 earnings beat our forecast by 25% as the GPM of 16.9% was better than our estimate of 16.2%.</li><li>Operating expenses to sales marked at 11.7%, lower than the expectation of 12.6% (approximately Bt400mn), and credit tax expenses exceeded our expectation (by around Bt100mn).</li></ul>

TU reported a 2Q23 net profit at Bt1.0bn (-37% YoY, +1% QoQ). The earnings fell YoY because of a decline in sales as well as a dilution effect after ITC was listed to the SET.The 2Q23 earnings beat our forecast by 25% as the GPM of 16.9% was better than our estimate of 16.2%.Operating expenses to sales marked at 11.7%, lower than the expectation of 12.6% (approximately Bt400mn), and credit tax expenses exceeded our expectation (by around Bt100mn).

Earnings Review - Thai Union Group Plc. (TU) - AUGUST 8, 2023

<ul><li>We have a negative view on the information obtained from the recent analyst meeting.</li><li>The earnings outlook in 1Q23E seems gloomy, with the firm revising down its sales growth and gross profit margin targets.</li><li>This led us to trim our 2023-24E core profit projections by 4.6% and 4.8%, respectively.</li></ul>

We have a negative view on the information obtained from the recent analyst meeting.The earnings outlook in 1Q23E seems gloomy, with the firm revising down its sales growth and gross profit margin targets.This led us to trim our 2023-24E core profit projections by 4.6% and 4.8%, respectively.

Thai Union Group - 2023-24E Earnings Forecasts Revised Down

Thailand

Thai Union Group Public Company Limited provides frozen and canned seafood products. The Company offers seafood products including tuna, sardines, mackerel, herring, and salmon. Thai Union Group serves customers worldwide.

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Thai Union Group (TU-R TB)

Agri & Food: Momentum in 2Q24E Expected to Grow YoY and QoQ

In particular, major meat operators, including those engaged in the swine business in Vietnam, are anticipated to shift from losses in 2Q23 to profits

Krungthai XSpring

Meat Sector – Thai Swine Prices to Recover in 2H24E

The Thai swine industry is anticipated to face continued challenges this year, though not as severe as the difficulties encountered in 2023.

Krungthai XSpring

Analyst Briefing - Thai Union Group Plc. (TU) - August 9, 2023

While we expect HoH earnings improvement in 2H23E due to seasonality (but a YoY decline due to the high base of Bt2.5bn in profit in 3Q22 and...

Krungthai XSpring

Earnings Review - Thai Union Group Plc. (TU) - AUGUST 8, 2023

TU reported a 2Q23 net profit at Bt1.0bn (-37% YoY, +1% QoQ). The earnings fell YoY because of a decline in sales as well as a dilution effect...

Krungthai XSpring

Thai Union Group - 2023-24E Earnings Forecasts Revised Down

The earnings outlook in 1Q23E seems gloomy, with the firm revising down its sales growth and gross profit margin targets.

Krungthai XSpring

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