TISCO Securities Company Limited has reiterated its “BUY” rating on Thai Union Group (SET: TU) with a 12-month target price of Bt15.30, noting that while near-term sales are recovering, earnings remain under pressure from weak gross margins. The firm projects that the main earnings rebound will occur in 2026.
3Q25F Outlook
TISCO expects 3Q25F sales revenue to rise both quarter-on-quarter (QoQ) and year-on-year (YoY) across most business lines, supported by organic growth and easing FX headwinds.
- Ambient: Stronger volumes and price hikes to drive recovery.
- Pet Care: Forecast to grow 7% YoY, with the premium mix stabilising at 47–50%.
- Frozen: Expected to deliver single-digit growth.
However, margins remain under strain. 3Q25F net profit is projected at Bt1.2 billion, down 14% YoY and 6% QoQ, as gross margins contract due to the 19% US import tariff and high promotional spending. European retailers’ heavy discounting to compete with private labels is also adding pressure. TU is negotiating further price increases with US customers to mitigate the tariff impact.
2025 Weak, 2026 Recovery
TISCO forecasts 2025F net profit at Bt4.4 billion, a 12% YoY decline on tariff and demand headwinds. Earnings are expected to rebound by 16% YoY in 2026F, supported by improving industry conditions, better tariff clarity (19%, versus earlier concerns of 36%), stronger product development, and customer adaptability.
The valuation is based on 14x projected 2026F earnings, underpinning the Bt15.30 target price. Dividend yield is projected at 4.8% in 2026F.
Transformation & Partnerships
Ongoing operational initiatives remain on track:
- Project Sonar – due end-2025.
- Project Tailwind – targeted for completion in 2026.
In parallel, collaboration with Mitsubishi Corporation (MC) continues to strengthen supply chain resilience through portfolio expansion and procurement, particularly in the Frozen and Pet Care segments.
Key downside risks include a global economic slowdown, tougher customer negotiations, and higher input costs arising from tariffs.
